Question 1: l was interested in Maureen Jordan’s article on Fortescue (FMG) (see https://switzerreport.com.au/hot-stock-fortescue-metals-fmg/ [1] ), as I have sold my stock this week @ $ 23.05. At what price would you consider to be a good re-entry to this stock?
Answer: I prefer BHP to Fortescue (FMG) because it has a more diversified set of commodities and arguably better mines. The brokers also prefer BHP.
Interestingly, all the major brokers are bearish on Fortescue. According to FN Arena, the consensus target price is $16.66, about 24.7% below the current ASX price of $22.12. Apart from general concerns about the strength of the Chinese steel industry, they are worried about the cash drain of Fortescue Future Industries. With BHP, the consensus target price is $43.90, about 5% lower than the last ASX price of $46.22. In the short term, both are prisoners of the iron ore price (BHP to a lesser extent), over which they have no control. My sense is that with China re-opening, this will stay reasonably firm, so I am not concerned about being “market weight” in this sector. I am not sure, however, whether I want to be overweight.
So if you are trading Fortescue, notwithstanding the bearish outlook from the brokers, I wouldn’t be too greedy. Looking at the chart, maybe around $21.50.
Question 2: It appears Labor has reneged on the promise of not altering the superannuation laws for retirees. What is next on their agenda?
Answer: I am not sure about “what is next on their agenda”, but I will be watching the May Budget very closely. I wouldn’t be surprised if they decide to not pass on some of the automatic increases to the super caps.
For example, the transfer balance cap (which governs how much a retiree can have in the 0% tax rate pension phase of super) is scheduled to increase from $1.7m to $1.9m on 1 July. This is due to the impact of inflation. Potentially, the Government could decide and legislate to keep this at $1.7m.
The Budget should be very interesting.
Question 3: I own shares in Star Entertainment (SGR). They are raising money through an entitlement issue. Should I take part?
Answer: I wrote about Star on Monday (see https://switzerreport.com.au/should-you-take-part-in-the-star-entertainment-group-sgr-capital-raising/ [2] ). It is a 3 for 5 entitlement, and the new shares will be issued at $1.20 each.
I think it is a bit of a “no brainer” to accept, as all the “bad news” about the business has to be out. If you don’t want to increase your exposure, you can sell some of your current shares on the ASX around $1.48 and buy them back in the entitlement at $1.20. But you will need to hurry as the offer period is very short. It is due to open today and close on Monday week (13 March) at 5.00pm.
Question 4: Woodside is paying a whopper fully franked dividend of over $2.00 What is the last day to buy Woodsides shares and get the dividend?
Answer: Woodside has declared a dividend of US$1.44 per share, or approximately A$2.11. It is fully franked, and will be paid on 5 April.
Woodside trades ‘ex-dividend’ on 8 March, so the last day to buy Woodside and get the dividend is Tuesday 7 March.