What are the characteristics of the next FMG??

[akumaslair]

hello everyone,

was wondering if the more experienced can tell me what are the characteristics of a company to be the next FMG?????

Ive been trading mining/explorers, made a few hits and misses...

I know a guy who bought into FMG at 0.20 and sold out within a few days thinking they weren't very good.

with these miners, other then the obvious factors such as decent management, $$$ etc. etc.

do these so called nothing companies whose SP is like 1c each, simply try and gather as much money as possible to drill/explore, and they typically will shoot up 100%-1000% in matter of days or weeks if they hit the absolute goldmine of the century........

so what I am asking is, is it almost pure luck........ to be able to pick a stock in the early stages that are going to be like an FMG????

comments appreciated!!

 

[So_Cynical]

Re: What are the characteristics of teh next FMG??

FMG - FORTESCUE METALS GROUP LTD

First listed 01 Oct 1987
First traded 01 Oct 1987

Amazing really...did nothing for 17 yrs then whoosh.

A 20 year old company is not an overnight sensation...imagine holding from day 1

10 year chart below.

 

[nioka]

Re: What are the characteristics of hte next FMG??

hello everyone,

was wondering if the more experienced can tell me what are the characteristics of a company to be the next FMG?????

Ive been trading mining/explorers, made a few hits and misses...

I know a guy who bought into FMG at 0.20 and sold out within a few days thinking they weren't very good.

with these miners, other then the obvious factors such as decent management, $$$ etc. etc.

do these so called nothing companies whose SP is like 1c each, simply try and gather as much money as possible to drill/explore, and they typically will shoot up 100%-1000% in matter of days or weeks if they hit the absolute goldmine of the century........

so what I am asking is, is it almost pure luck........ to be able to pick a stock in the early stages that are going to be like an FMG????

comments appreciated!!

You are asking for an answer from the future. If anyone has been there please hold up your hand so that we can all stop guessing. If the answer was known then the price would have risen. Last week there were a lot of ASFers about to clean up with MHL today that dream fizzled but then again tomorrow it may boom again. Just remember the bigger the potential profit the bigger the risk.

 

[tech/a]

Re: What are the characteristics of hte next FMG??

with MHL today that dream fizzled

Not if you were short.
Infact those trading CFD's short can have a field day shorting these huge one week wonders.
There are massive signs.
I have had a look technically on the threads of JMS and MHL and pointed out the weakness in each.
No I didnt short them but Ive seen it so so often I'm sure as hell opening a CFD account.

FDL was another.
Markets hate HUGE range and HUGE volume,most see it as a sign of strength in up moves and weakness in down moves.
Infact most of the time its the exact opposite!

 

[Snagglepuss]

Re: What are the characteristics of hte next FMG??

Not if you were short.
Infact those trading CFD's short can have a field day shorting these huge one week wonders.

Yeah, except I very much doubt that any provider would offer CFDs over minnows like FDL or JMS ... Willing to be proved wrong, though!

- Snaggle.

 

[nomore4s]

Re: What are the characteristics of hte next FMG??

Yeah, except I very much doubt that any provider would offer CFDs over minnows like FDL or JMS ... Willing to be proved wrong, though!

- Snaggle.

Macquaire Prime will let you short them but with little or no margin

 

[akumaslair]

I think I need to clarify, I am not requesting people tell me which stocks are going to be like FMG etc...

Just would like to know what are the typical characterisitcs of one that will make it more likely then another stock... or what is the main one.... just for the beginners to get some idea...

 

[the barry]

I think I need to clarify, I am not requesting people tell me which stocks are going to be like FMG etc...

Just would like to know what are the typical characterisitcs of one that will make it more likely then another stock... or what is the main one.... just for the beginners to get some idea...

The most important characteristic of a stock like fmg is the number of shares on issue. Its low number of shares on issue has allowed the share price to climb to the highs it has. The fewer the shares on issue the higher the stock price can run.

That is one of the main reasons i am in bannermans (bmn), it has approx. half the shares on issue that fmg has so it has the potential to run quickly. Having said that not many companies come up with the resource that fmg has.

 

[Timmy]

The most important characteristic of a stock like fmg is the number of shares on issue. Its low number of shares on issue has allowed the share price to climb to the highs it has. The fewer the shares on issue the higher the stock price can run.

That is one of the main reasons i am in bannermans (bmn), it has approx. half the shares on issue that fmg has so it has the potential to run quickly. Having said that not many companies come up with the resource that fmg has.

Thats interesting Barry. Can I ask a question about this point? In the tech boom this was the case with a lot of companies, the shares issued only made up a small portion of the overall "value" of the company - eg. company may have been worth $100, but only $10 of publicly trader shares available (numbers just examples). So is this the case with FMG? That is, the actual "value" of the company is X but there are only shares with a value of x/10 (or whatever) on issue, or do the number of shares on issue reflect entire value of the company?

 

[explod]

Re: What are the characteristics of hte next FMG??

Not if you were short.
Infact those trading CFD's short can have a field day shorting these huge one week wonders.
There are massive signs.
I have had a look technically on the threads of JMS and MHL and pointed out the weakness in each.
No I didnt short them but Ive seen it so so often I'm sure as hell opening a CFD account.

FDL was another.
Markets hate HUGE range and HUGE volume,most see it as a sign of strength in up moves and weakness in down moves.
Infact most of the time its the exact opposite!

Absoluely. There was huge volume for MHL on he 14th and 15th. What does that say? A lot of buyers, but equally a lot of sellers.

Good plays are usually steady uptrends, often on low volume, few want to sell, conservative buyers (have usually done their home work)

 

[RichKid]

The most important characteristic of a stock like fmg is the number of shares on issue. Its low number of shares on issue has allowed the share price to climb to the highs it has. The fewer the shares on issue the higher the stock price can run.

That is one of the main reasons i am in bannermans (bmn), it has approx. half the shares on issue that fmg has so it has the potential to run quickly. Having said that not many companies come up with the resource that fmg has.

Another, perhaps obvious, point to note from a supply/demand perspective is that the fewer shares on offer the greater the effect of buyer demand on the share price, it only takes a bit of buyer energy to drive prices higher as supply has dried up. Wyckoff made some interesting points about balance points where the scales tip inexorably in favour of oneside- thanks to motorway again for his insights. This is especially so in highly emotional markets like the resource speccies, consider it a form of leverage. Fat Prophets Mining and other tipsheets that track these small caps often keep an eye on 'dilution of ownership' or the number of shares on issue when filtering candidates.

As long as the stock is liquid, trends cleanly and has high daily turnover with narrow spreads (ie easy to get in and out of) then it'll have my preference from a TA perspective- but not many of the 'small chips' share these traits. Some small caps have a bad reputation for issuing millions of shares, even if they make a huge discovery worth hundreds of millions very little will filter through on a per share basis- not that the market always considers this initially when people are euphoric. I'm not much of an expert on speccies so these thoughts might be flawed.

 

[Kauri]

Fairly difficult I would have thought to pick another FMG...
AMS brought Twiggy on board and gave him about 50% of the company in cheeep options, he then changed the Co. name to FMG and started what he does best, selling the companies story to investors... so this one was a combination of a Management change later backed up by the China ore story.. I think..
Cheers
........Kauri

 

[akumaslair]

Can anyone else confirm or agree with Barrry...

would the smaller number of shares be the most important factor in determining this???

 

[tech/a]

Can anyone else confirm or agree with Barrry...

would the smaller number of shares be the most important factor in determining this???

Think about this a little.
Potential and performance have little correlation until its on its way.
You can sit in 50 stocks with potential.
Its the one that moves you want to be on.
I maybe wrong but thats the aim of your question is it not?

 

[prawn_86]

Can anyone else confirm or agree with Barrry...

would the smaller number of shares be the most important factor in determining this???

Its really not about the number of shares, its the market cap.

A company and have 1bill shares @ $1 = $1bill MC or 100mil shares @ $1 = $100mill market cap.

So therefore buying co's with low # on issues makes no difference really, it depends on the price of the shares and the number ie - market cap.

 

[alphman]

Can anyone else confirm or agree with Barrry...

would the smaller number of shares be the most important factor in determining this???

The number of shares only determines the price at which a company trades at.

eg.
Company ABC has 100,000,000 shares and has a market value of $500,000,000. Share price is $5.00.
Company XYZ has 500,000,000 shares and has a market value of $500,000,000. Share price is $1.00.

In terms of "potential gains", to me it makes no difference.

eg.
Company ABC has 100,000,000 shares and has an initial market value of $10,000,000. Share price is $0.10.
Company XYZ has 500,000,000 shares and has an initial market value of $10,000,000. Share price is $0.02.

Assume both companies are successful and are now worth $500,000,000 (as in the previous example). Gain for both is 50 times, so no difference.

Therefore, ther smaller number of shares is NOT "the most important factor in determining this".

It is more a combination of strong management, quality projects, market sentiment and self-integrity among many other factors.

You can find the strongest management with the highest quality projects, but in the end market sentiment towards the company determines the price, and self-integrity determines your gain (eg. If I invested $100,000 in FMG "back then" when it was trading at $0.20, I probably would have sold when it reached $1.00, realising 500% and thinking "you beaut!". Little would I have known at the time that if I held on, it could have doubled, tripled, quadrupled.. etc - the higher the share price, the greater my investment, the wobblier my knees)

So, to answer your question, there are no solid characteristics of an FMG-like company, but management and project quality are considered a good start. Whether or not you can bring yourself to forget about it for 10 years is another story.

(All IMO).

 

[mr_delta]

You can find the strongest management with the highest quality projects, but in the end market sentiment towards the company determines the price, and self-integrity determines your gain (eg. If I invested $100,000 in FMG "back then" when it was trading at $0.20, I probably would have sold when it reached $1.00, realising 500% and thinking "you beaut!". Little would I have known at the time that if I held on, it could have doubled, tripled, quadrupled.. etc - the higher the share price, the greater my investment, the wobblier my knees)

On a similar note, but in a different country (India), there is a parallel story…

In 1977 a company called Reliance Industries Ltd was floated and any investor who invested Au$30 (IPO price – 30c per share)at the time today finds his investment at over Au$200,000 due to number of bonus shares & free shares allocated in 3 other companies. The Chairman of this company recently became the world’s richest person based on this valuations. I read in the Indian papers that there are more than 10% of seed investors still on the company records as current share holders. They are reaping the maximum benefit of this huge upside simply because of the fact that they did not bail out when the sp moved from 30c to $3 or 5 or 10 or at its current $150 (based on the fact that it is now split into multiple companies). So according to me when you are on such a ride, the best option would be to sit tight & let your profits work for themselves. This is IMO a “really solid return on investment”.

 

[adobee]

I bought FMG at $7 after reading an arcticle in brw rich 200 that said he had been the richest and poorest in the 200 on and off throughout the year.. At this time I was looking for potential mining players and after reading up on him decided he was a player (I am still of this mind frame and still not to sure I believe everything he says) however if you can find a manager like this who talks the talk but doesnt get caught out the company can look awfully good..
I sold FMG at $20 thinking it was to good to be true and would retrace.. I am still waiting.. My pick for the next FMG still share is AND Andean resources potential of big reserves, already a fast mover and investors who hold on..

 

[ithatheekret]

Anything with a solid reserve of coal in their tenements , would have to have a look in . 2008 will be a good year for coals .

 

[the barry]

The number of shares only determines the price at which a company trades at.

eg.
Company ABC has 100,000,000 shares and has a market value of $500,000,000. Share price is $5.00.
Company XYZ has 500,000,000 shares and has a market value of $500,000,000. Share price is $1.00.

In terms of "potential gains", to me it makes no difference.

eg.
Company ABC has 100,000,000 shares and has an initial market value of $10,000,000. Share price is $0.10.
Company XYZ has 500,000,000 shares and has an initial market value of $10,000,000. Share price is $0.02.

Assume both companies are successful and are now worth $500,000,000 (as in the previous example). Gain for both is 50 times, so no difference.

Therefore, ther smaller number of shares is NOT "the most important factor in determining this".

It is more a combination of strong management, quality projects, market sentiment and self-integrity among many other factors.

You can find the strongest management with the highest quality projects, but in the end market sentiment towards the company determines the price, and self-integrity determines your gain (eg. If I invested $100,000 in FMG "back then" when it was trading at $0.20, I probably would have sold when it reached $1.00, realising 500% and thinking "you beaut!". Little would I have known at the time that if I held on, it could have doubled, tripled, quadrupled.. etc - the higher the share price, the greater my investment, the wobblier my knees)

So, to answer your question, there are no solid characteristics of an FMG-like company, but management and project quality are considered a good start. Whether or not you can bring yourself to forget about it for 10 years is another story.

(All IMO).

What you are saying is completly incorrect, the question is asking what are the characteristics of the next fmg.

In your example above, say the two companies hypothetically have the same resource in the same country etc.

In your example the company abz would have a share price of $5 compared to that of xyz of $1

Now if xyz was to run to that of abz, it would have a market cap of 5 times that of abc which is completly illogical.

Market cap is = number of shares on issue x the current share price.

Now do you understand why the number of shares is one of the most important factors when determing a shares ability to run?