Question: Is there any where I can find out have many people have shorted BHP? Also I have some and would like to add some more at these levels. Should I follow the stock down or wait for it to start going up and then start buying?
Answer (By Paul Rickard): You can view ASIC short sales reports here. The reports are based on “trade date” – so the most recent report is still only as at close of business on 27 November.
With BHP, the recorded short sales are (so far) fairly negligible – about 0.4% of the stock outstanding. If you see BHP as a core stock for your portfolio long term, then I would be buying in weakness. I think we are going to be in for a pretty rough ride on commodity prices – so I wouldn’t be in a super hurry – however you would probably say that the last few days was a touch overdone.
Question 2: I am thinking of buying Argo (ARG) or Australian Foundation Investment Company (AFI) shares. Which do you think could be the better to buy? And do you think it would be all right time to buy now?
Answer 2 (By Paul Rickard): I would be buying the stock at the smallest discount/premium to NTA. Performance records are fairly similar which you can see here.
AFI’s last reported NTA (28 Nov) was $5.68 – it is probably now up to around $5.72 – so at $5.95, it is trading at around a 4.1% premium.
ARG’s last reported NTA (31 Oct) was $7.51 – it is probably down now to around $7.30 – so at $7.88, it is trading at a premium of 7.9%.
Both Argo and AFIC are relatively expensive.
Maybe you should consider an exchange traded fund, perhaps SPDR’s STW.
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