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bbandassoc 131 posts  |  Last Activity: Dec 16, 2014 8:08 PM Member since: May 31, 2011
  • bbandassoc by bbandassoc Oct 16, 2014 3:34 AM Flag

    It seems all analysts expect a fairly stable IO price in 2015 and 2016 in the mid-$80s to low-$90s. So, if VALE is going to increase sales fairly dramatically (50% by 2018) of even lower cost ore, some as low at $15 to produce, ship it cheaper with VALEMAX to China and enjoy a 9 percentage point lower Brazilian tax rate, then, it would seem to me the future is pretty bright. And, if the high cost supply leaves the market and IO prices rise, then, this stock could soar.

  • Reply to

    i like what

    by larry2607 Oct 16, 2014 12:04 AM
    bbandassoc bbandassoc Oct 16, 2014 2:47 AM Flag

    Unless the Motley Fool analyst was wrong, the LINE board approved a $250 million unit buyback last quarter that could repurchase 11 million units at these prices and reduce future distribution outlay $32 million per year while increasing the coverage ratio 3%.

  • bbandassoc bbandassoc Oct 15, 2014 9:15 PM Flag

    My understanding is the dividend is safe (per CEO) because they still have assets to sell and they are reigning in both operating costs (VALEMAX, lower cost ore and elimination of the 9% incremental tax in Brazil) and capital costs, both helped by the weakening Real as well as increasing volume. Even with stable IO prices, VALE should do very well with higher volumes of lower cost to produce ore and lower operating as well as capital costs. If IO prices climb, they are golden.

  • bbandassoc by bbandassoc Oct 15, 2014 7:28 PM Flag

    AAPL alone is the only single factor referenced as the primary contributor to China's export increase and the only single reference noted as a positive in US retail sales. Sure, it's correcting as hedge funds losing left and right take some profits, but it will run like crazy once this is past.

  • bbandassoc by bbandassoc Oct 15, 2014 4:43 PM Flag

    Some interesting commentary, if I can assume he has his facts straight. First, he says only about 7% of LINE's cash flow is at risk in 2015 due to an effective hedging program. Second, he stated that most investors don't realize that the LINE board approved a $250 million unit buyback last quarter that, if implemented, could purchase about 11 million units that would reduce future annual distributions by $32 million and increase the coverage ratio 3%. Finally, he said the distribution is secure and points to the 2008 crisis to illustrate just how effective LINE's hedging has been during times of crisis, and that a 20% drop is not a crisis.

  • Reply to

    Brilliant VNR press release

    by bobdbus Oct 15, 2014 8:13 AM
    bbandassoc bbandassoc Oct 15, 2014 8:37 AM Flag

    Thanks for the information. Looking at the table, it appears they have are starting from a similar payout coverage as LINE is expected to have (1.15X). However, they have much less hedged than LINE, but LINE is oilier, so not sure how LINE might compare, but my guess is LINE is fully covered in 2015 at oil of $70 and NG of $4 as well. LINE has lived through earlier such price declines and never cut the distribution, so I highly doubt that is in the cards now either, at least thru 2016 or 2017.

  • bbandassoc bbandassoc Oct 15, 2014 6:10 AM Flag

    And, VALE specific things like bringing back VALEMAX to China and bringing on higher volumes at lower costs of production while reducing capital spending should provide leverage against any meaningful increase in IO prices and improvement in Brazilian investment climate with new president.

  • Reply to

    Drop in Oil prices and Margin Selling.

    by sholley111 Oct 14, 2014 5:31 PM
    bbandassoc bbandassoc Oct 14, 2014 7:18 PM Flag

    Whether calls or just panic, I agree that a lot of people bought a 10% distribution on 2% margin and are now panicking that it's not such a great deal. Things will settle out over time, but many will trade the troughs and rises along the way. The only people making money are the traders in this market.

  • Reply to

    They Can't Cover the Dividend !

    by donkergen Oct 14, 2014 2:12 PM
    bbandassoc bbandassoc Oct 14, 2014 7:14 PM Flag

    A little analysis or data might be helpful. From my perspective, based on the hedging situation, I think they have the distribution covered for the next 2+ years without doing anything. And, the price of oil will rise much quicker than that because too many countries need a higher price. Give it a couple of months and something will change the dynamics.

  • Reply to

    Vale

    by golfshoeson2001 Oct 14, 2014 5:27 PM
    bbandassoc bbandassoc Oct 14, 2014 6:57 PM Flag

    Where do you get your IO price information? I haven't had any luck finding current updates, unless there happens to be an article about it. I agree though that the rise in IO prices is the cause of the rally..........along with the fact that the huge short volume must be wondering whether it makes sense to not cover before the dividend is due when IO prices are rising and the election looks to be going towards Neves.

  • Reply to

    Oct. 26 Runoff election - Neve favored

    by lankyosis Oct 13, 2014 7:42 PM
    bbandassoc bbandassoc Oct 14, 2014 8:28 AM Flag

    The elections should help all Brazilian stocks, including VALE, but the price action we are seeing now is more likely tied to IO prices where futures surged yesterday morning 4% (maximum allowed). Shorts are in a bit of a fix right now if IO prices are going up, the election is going in VALE's favor and the 3%+ dividend is coming due.

  • Reply to

    JPMorgan raises VALE target

    by cash.mccall Oct 12, 2014 11:43 PM
    bbandassoc bbandassoc Oct 13, 2014 7:03 AM Flag

    I suspect this is old, but the last I saw they did have a $17.50 PT. Perhaps the strong Chinese import/export data and Neves extending his lead in the election will get us heading in the right direction today.

  • Reply to

    Miner super commodity bubble will form

    by cash.mccall Oct 11, 2014 12:39 AM
    bbandassoc bbandassoc Oct 12, 2014 6:34 AM Flag

    Are you saying ore and oil prices will rise to create a bubble or are you saying they will fall because they are forming a bubble, even though they are down? Thx

  • Reply to

    Neves Widens Lead in Latest Poll

    by bbandassoc Oct 12, 2014 6:28 AM
    bbandassoc bbandassoc Oct 12, 2014 6:32 AM Flag

    Correction: It was Neves 52.4% and Rousseff 36.7%.

  • Neves over 51% and Rousseff at 36% in latest poll, margin of error 2.2%. Two weeks to go to run-off. Looking promising.

  • I notice in 2010 when Brent was $75 and NG bouncing between $3.80 and $5.00 that LINE was steady at $25 and paying a $2.55 distribution quarterly. Any thoughts on why with Brent at $90 (20% higher), NG at $3.86, LINE's hedging situation, and a $2.90 distribution that LINE wouldn't be trading significantly higher, other than current market panic re: energy names in general due to the uncertainty of where oil prices may land?

  • bbandassoc bbandassoc Oct 11, 2014 6:45 AM Flag

    Three days in a row a combination of shorts and panic has driven the stock down in the morning with opportunists and short-covering taking it back up the balance of the day until the traders close out their long positions late in the day. I have enjoyed the trade (historically hard to do with LINE due to lack of volume), but it sure is unpleasant to watch my long positions lose so much value so quickly on paper.

  • Reply to

    Next support?

    by solve1enigma Oct 8, 2014 10:12 AM
    bbandassoc bbandassoc Oct 11, 2014 6:38 AM Flag

    Yes. You are correct and it was obvious by looking at the chart, so why I bought it at $575 in hindsight I just don't know. Earnings should get it moving back up on the 16th. Maybe we will even get a run into earnings after it hits $550.

  • Reply to

    Brazil election poll... hopeful

    by cash.mccall Oct 9, 2014 9:43 PM
    bbandassoc bbandassoc Oct 10, 2014 10:59 PM Flag

    I disagree that it has little impact on VALE. Right now, major investors shun anything Brazilian because of Rousseff. With a new, business friendly government, investment would enter Brazil and companies, like VALE, would return to being valued on par with non-Brazilian businesses which alone would be good for a 30% increase in the stock.

  • Reply to

    look at CLF

    by mikemakeavoice Oct 3, 2014 11:49 AM
    bbandassoc bbandassoc Oct 10, 2014 10:55 PM Flag

    Fundamentally, the big three are moving the iron ore mining business into an oligopoly and oligopolies have much higher profitability. Personally, this is why I am buying and keep buying VALE and will hold it while the oligopoly is formed because in time this stock is much, much higher than this insanely undervalued situation it is in now.

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