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I guess it depends upon the price of PGM metals.
Guvi calculated a fair value to 115p and sold his holdings. He then bought back in again below 90p.
PGM prices have dropped since then, so who knows? The market currently thinks that 100p is too much.
I've mentioned a few times that I think it could be the victim of a leveraged buy out. The debt, taken on to buy the company, could be cleared very quickly and then the buyers could extract serious cash from the business.
Rio Tinto and BHP are diversifying into other metals, so there is always the possibility they might snap it up.
Ouch indeed...
I'm not sure where we'll bottom out or when the corner might be turned.
The news coming out of China is a bit worrying and American markets do seem to be a bit frothy.
https://finance.yahoo.com/news/stocks-could-be-due-for-a-correction-of-up-to-20-by-fire-or-ice-morgan-stanley-strategist-185927231.html
I've decided upon an overall portfolio strategy involving mainly ITs and have been increasing my cash position to take advantage of any corrections.
Personally, I'm now hoping that SLP's price recovers to a decent level before any market corrections occur. I'd ideally like to recoup my initial SLP investment (63p average purchase price) and run the profits. I could do that now, but it feels a bit painful after recent highs - I certainly don't want to panic sell.
To be honest, I'm a bit worried that a combination of PGM prices and wider macro shocks (especially a USA stock market panic/selloff) might combine to give SLP's share price a severe kicking and wipe out my profits. If we have a decent rally that puts us over 100p, I might bite the bullet and reduce my holdings / recoup my investment. I can always buy back in at a later date.
I guess a lot of people have been burned when buying after the previous SLP recommendations.
The IC website shows all the previous articles relating to a share, so even cursory IC based research will show recommendations to buy followed by a falling share price - which is exactly what's happened this time.
https://i.postimg.cc/FRqWBc7T/image-2021-09-13-093517.png
I don't think we're going to see any improvement until the chip shortage ends and (if?) car production ramps up again.
Somebody on these boards questioned whether new car sales would recover in the post-covid 'work from home' world. I can definitely see the bear case (I'm certainly not looking to replace my car) but, perhaps, the macro trend of migration to the countryside will result in higher car sales as people can no longer rely on the good public transport systems found in cities?
Ultimately, time will tell. I'm not expecting things to improve until at least mid 2022.
@toptiger
I agree it does seem high for such valuable metals, but I've no idea what the actual cost of smelting is and it's not in the accounts. Perhaps that explains the discrepancy, that's been discussed before, between the spot price and the price received by SLP?
@ashikshetty1
"THEY WOULD NOT BE MENTIONING THE DIVIDEND IF TEMPORARY PRODUCTION ISSUES WERE A CONCERN"
Plenty of FTSE100 companies use their dividends to distract from bad news and shore up their share price. I'd be careful using that kind of logic to make buy/sell decisions.
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@toptiger
"It's not producing though is it ?"
I presume that SLP's equipment isn't running at maximum capacity 100% of the time. Any backlog of work can, presumably, be made back at a later date?
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@stoodio
"Yes, it's raining money :)"
The dividend is welcome, but it will take a long time to regain the capital 'losses' via dividends. I won't be popping the corks until we're past 150p - if we ever get there!
"That price movement the last 2 days of last week, dictates to me that somebody knew there was a sexy divi on it's way"
I've been heavily criticised for suggesting Mr Market was party to information, that we weren't, when the share price was sliding. If you think this is the case, then it would also suggest that a falling share price is a signal to sell because 'they' know something you don't.
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@LunaNera
"We had a top up opportunity around 84p!"
Indeed we did. I don't really 'trade' shares because of the bid/offer spread and a belief in long term buy and hold, but SLP seems to have fantastic swings, if that's your thing.
My two pence worth...
This board is a self selecting group of people that, on the whole, want the share price to soar. People have bought in at various price points and some are therefore more vulnerable than others to price volatility that others.
Maybe some people haven't been investing for very long and are a bit naive with regards to negative commentary - i.e. they assume that any words of caution are the evil shorters trying to 'steal' their shares - cries of 'deramper', 'shorters' and 'hedge fund rent boys' are thrown around with abandon.
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Guvi - you appear to have called the prices / timed things pretty well. I wish I'd followed your trades and sold/bought to increase my holdings. Well played and good luck to you.
@toptiger
I returned to the UK late last night (travelled abroad with my wife for her medical treatment), but I'm quite busy with other stuff. I'm keeping an eye on SLP via my phone (it's my biggest holding) but I don't have time for research at the moment. I'm back at work next week and will take a serious look then.
I agree that July's weakness was due to the rioting (an unpopular opinion at the time).
I think that current uncertainty over Afghanistan and the implications for geopolitics (i.e. 'weak' America Vs China), and the potential impact upon global trade is combining with the chip shortage and South Africa's in country risk, is combining to knock the SLP share price.
These type of events tend to get overplayed with traders deliberately trading the volatility and exacerbating any movements.
I'm sitting tight and, with a lack of actual SLP news, have no current plans to sell. Oh for a crystal ball....