Sorry guys I think you've got it wrong re Stokes:1. He's a tight...

Sorry guys I think you've got it wrong re Stokes:

1. He's a tight ass when it comes to paying a t/o premium. He already has control of IOH so it would have to represent an absolute steal before he'd take it out. If the SP stays (is kept?) under $1 for another 12 months (on the basis of IO/markets staying choppy) then I'd suggest any t/o offer likely to succeed would be more likely to be around $1.5 mark.

2. He's got bigger fish to fry - the foxtel carve up will be occupying much more of his time. On top of the his other businesses need attention and I don't believe he is especially cashed up currently. I think IOH was just an opportunistic response to Twiggy/Gina/IO in generals boom since 2007 and an opportunity to get Ryan some more board experience.

3. I think he'd actually listen to offers himself at the mythical $2-2.5 mark right now. Of course none will come, sadly for SH!


Instead IOH needs to do the following:

1. Cut costs and conserve capital. At current prices reinstating the buyback (but done sensibly this time - only buying 10-15% of daily volume) would also create SH value.

2. Focus on JVs and options over assets rather than outright purchases (unless small (<10m) and absolute bargains). JV should have IOH retaining the right but not the obligation to contribute exploration $ etc over a series of 8-12 quarters. Similiarly options over stakes or stakes with largely deferred payments and walk clauses. Basically if they are going to 'bet the farm' (ie $$ - the key asset IOH has until the AuD falls and IO becomes a more profitable commodity again for the marginal producers), then they need to be getting the mother of all deals. And I'd argue that they shouldn't be doing this but rather looking for optionality.


On a personal investment note I'd agree that IOH represents good buying at current prices. If like me you believe that IO prices will rebound back to $100-110/t over the next 3-6 months and the AuD will fall sharply over the next 12 months (75c maybe?) then IOH will come out the other side with a much improved SP. Perhaps it will fall further (not sure why superwealthy picked 60c) but perhaps it won't - now is certainly a good price to be building a position. I don't think the 12 month SP has much downside risk at current prices..