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I should have said, sage words, not advice by the way.
Thank you Londoner7, sage advice and appreciated. I have a small pot of cash, burning a hole, earning zero interest in my brokerage account. I think BHP will be its home, I already have some RIO and like yourself, have traded back and forth at various price points.
I shall take your advice on the suggested reading which sounds useful in terms of understanding the longer term.
Best regards
Reader61, if you're looking for advice on trading BHP today, I can't offer any.
But if you are looking for an entry point to a long-term holding in BHP then these bid situation opportunities don't come up very often. I like to invest in companies that offer me an interest in their activities. BHP is the largest miner in the world and at the forefront of the application of technology as the world transitions towards clean energy. This stuff fascinates me and BHP covers it well in their 'insights' publications. Want to know about the practicalities of the transition, then read what BHP has to say. These are the guys at the coal face, not the idealists sitting at a keyboard.
I've held a stake in BHP for decades and I trade - both sides - as the opportunity arises. If you wish to build a holding then take a small stake today - large enough to minimise trading costs - and pound average over time. In 10 years time, whether you average in at £21 or £23 will be an irrelevance.
Incidentally, you could make a similar case for RIO or other large miners. Take a look at their portfolios and direction of travel, and pick one that appeals to your interests.
If they engage in bid warfare, the BHP price will drop from here to offer a more attractive entry point. However, without knowing the bigger strategy alluded to by other posters do I jump or stick?
Nobody has considered the combined value of the two companies
Solomonkane, in answer to d)
I've no doubt the M&A team at BHP will have run the rule over all possible candidates. They'll understand the regulatory and local risk involved in the assets and the likely price of a successful bid. AAL has well publicised problems outside of the core copper and iron assets of interest to BHP, and I'd guess BHP sees those issues around AAL as providing an opportunity. Once in play there are a number of possible outcomes. I doubt BHP ever expected their initial bid to be successful, but rather it is part of a larger strategy.
I'm a long term holder in BHP (decades), trading when the opportunity presents but always maintaining a stake. I don't like the short term impacts on the BHP SP of these bid approaches but it is part of the game.
The FT has an excellent article on the merits of buy or build - worth a look if you can get access (subscription)- titled, The ‘build or buy’ copper maths that could guide BHP’s bid for Anglo.
a few thoughts.
a) bhp has not won hearts and minds on this at all- most of its institutions cannot see the merits / logic of this pick and mix approach - bhp has not done its home work on the merits of this at all.
b) why on earth does bhp want debeers? diamonds have had it -they are now being manufactured cheaply- the whole industry is in a slow death
c) reputational risk - bhp has an outstanding track record of investment returns. anglo does not, is cash poor, has some major capex to do, will dilute bhp earnings. bhp is taking a significant risk with its reputation. this is not like bhp/ oz minerals.
d) bhp wants copper assets, we have been informed - ok so why not anto***asta, first quantum minerals etc
e) other than modest corporate hq overlap, where are the synergies with this deal?
f) anglo am board are not going to approve without getting an over the top offer, which bhp if it has any sense is not going to offer- so who is pulling whose plonker here?
message to bhp; its not too late, withdraw honourably, deal was never there anyway, and it will be forgotten about in a few months. bhp does not need anglo am myriad of problems