Question 1: What Lithium stocks are worth buying to hold for the medium term?
Answer: The two main ‘pure’ play lithium producers are Orocobre (ORE) and Pilbara Minerals (PLS). Both are seen as close to fully priced by the analysts. According to FNArena, ORE: last ASX price $9.42, target price $10.15, 3 buy, 2 neutral recommendations; PLS; last ASX price $2.21, target $2.15, 1 buy/3 neutrals.
Mineral Resources (MIN), which is also a second-tier iron ore producer, has a target price of $53.75 compared to an ASX price of $39.15. 2 buys, 1 neutral, 1 sell recommendation. A “rising star” is Liontown Resources (LTR), which hopes to begin production by 2024. Macquarie covers the stock – a target of $1.70 compared to a last ASX price of $1.81.
Question 2: I’m looking to add to the portfolio CSL and QBE. I know you’re a massive CSL fan, is the current price of $295 a good entry point? What’s your opinion on QBE?
Answer: Yes, for CSL. Good medium-term buying. The analysts, for what it is worth, have a target price of $305.12. Range $280.00 to $325.00. 1 buy recommendation and 5 neutral recommendations.
QBE – marginally positive. Should benefit from higher margins and bond yields, but has ongoing risk of major event claims. Brokers like it – 6 buys, 1 neutral – target price of $13.90 vs last ASX price of $12.10.
Question 3: I am interested in the short-selling of BHP which is currently about 6% of stock (as reported in Peter’s Saturday report). That seems a huge dollar commitment given BHP is a major stock on the ASX. Yet during this period of short-selling BHP has managed some significant daily price increases. Why is the position so big?
Answer: The latest ASIC data shows the BHP short position to be 201 million shares or 6.82% of BHP’s ordinary shares. While this is an extraordinary position, I think you will find that it relates primarily to BHP’s plan to close the separately listed UK shares. Under the plan, the shares trading on the London Stock Exchange will effectively be swapped for the equivalent of the ASX listed shares. Because the UK shares have been trading at a considerable discount, arbitrageurs and others, upon the news, bought the UK shares and sold the ASX listed shares. This has led to the huge short position.
An alternative proposition is that some traders could be bearish on BHP and iron ore. This looks less plausible, as the short positions in fellow competitors, Rio and Fortescue, are relatively small at 0.25% and 1.45% respectively.
Question 4: What is the last date to buy ANZ shares to get the dividend of 72c? Can I also participate in the DRP (dividend reinvestment plan)?
Answer: ANZ is paying a full franked dividend of 72c per share. It will trade ex-dividend on Monday 8 November, so the last date to receive the dividend is to buy shares on or before Friday 5 November. Potentially, you could also participate in the DRP – elections must be made by COB on Wednesday, 10 November. DRP shares will be issued at market price – there is no shareholder discount.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regard to your circumstances.
