March 12, 2005 DO you know what an Anaconda is, Duckanweave? asked Frank Sources.
A big snake that squeezes the life out of you?
And a Fortesque? Do you know what a Fortesque is?
The broker's eyes glazed over. If it couldn't be traded, floated, spun off or backdoor-listed, Duckanweave didn't want to know.
Sizing up the progress of the Omegacorp stock price, the associate director of Thrust Parry Runaway & Hyde's global institutional wealth management division (stockbroker) reached for his beer.
A Fortesque, Sources pressed on, is a small striped fish found in sheltered bays and estuaries of the eastern seaboard. It is known otherwise as centropogon australis, and venomous spikes protrude from its dorsal spine. "Stepping on a Fortesque occasions harrowing pain which can endure for 12 hours," Sources intoned, gravely.
Our conversation turned to that other Fortescue, a singular species found in the corporate wilds of the western seaboard. Andrew "Twiggy" Forrest's iron ore play, Fortescue Metals Group, a junior turned juggernaut. Its market value surpassed $1 billion this week, inflicting in the process much joy upon those who had stepped aboard.
True, all the orbs in the corporate sphere had aligned at once - iron ore, China and bull market. Still, the Twigmeister had even his detractors gushing with admiration. "Superstar," said one yesterday, in awe of Twiggy's spectacular promotional flair, "He has got a chance, you know!" Indeed, if the Fortescue share price keeps up, Twiggy's "Third Force" in the Pilbara - against iron ore duopoly Rio and BHP - is a chance.
Since the Margin Call Institute for Metals Sector Analysis (MCIRSA) officially declared the resources bull market open in mid-2003, the value of resource stocks has doubled to $160 billion. Twiggy, given his penchant for dramatic performance, both over and under, has hoisted his Fortescue stock price 2780 per cent.
As Twiggy has shuttlecocked about the world, presenting in Europe, signing up the Chinese steel mills, spruiking his staple-gun drilling program high and wide, schmoozing politicians, institutions and brokers, Fortescue shares have comfortably doubled even in the past three months.
The scion of West Australian explorer and entrepreneur Sir John Forrest is without a doubt the best promoter in the country, perhaps the best Australia has seen.
With his 47 per cent Fortescue holding now valued at more than $500 million, he even managed to exercise $180 million worth of options the other day without spooking the market.
A "remarkably selfless corporate act", opined Twiggy - soi-disant. "He deserves a Nobel Peace Prize ... and a Pulitzer," opined a pundit. That was six weeks ago after cashing in a swag of 8c options when the stock was at $2.90. With the shares now a stratospheric $5.20, Twiggy must be sorely tempted to roll out a big capital raising. He's got a bit of cash in the tin but Fortescue is chewing through $8 million a quarter.
As his latest global presentation puts it, though, Fortescue is cheap. The boy is talking $13.86 to $25.74 a share. Ship in!
The institutions that backed the Twigmeister earlier in the piece aren't looking so gullible now, to be sure, although there's no way to value this thing.
The tangle of logistical, infrastructure, funding, regulatory and macro-economic challenges that Fortescue faces is daunting. He's taking on the Big End of Town too, in Rio and the Big Huge Pommie (BHP). With fairly low grade resources, yet undeveloped, Fortescue remains a concept stock, a momentum play, which could grind to a halt the moment China hiccups.
Playing off heavyweights Glencore and Anglo-American, and pulling $1.5 billion in funding from US bondholders, Twiggy forged the massive Murrin Murrin nickel project out of the deserts of Western Australia and took Anaconda to the moon - before the stock collapsed.
Is this "Icarus with a double bypass", as Frank Sources rather peremptorily labels our hero? If China keeps running, he might just pull it off. If not ...
FMG Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
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