Tag: ASX:BHP

Shares of BHP are up over 1% in early trade as the mining giant announced a USD 6.73 billion full year profit and declared a final dividend of 43 cents per share, which lifts the full-year dividend to 83 cents per share.

Higher prices for both Iron ore and Coking Coal helped contribute to the improved performance over the course of the year.

The company also announced that it wants to sell off its US Shale oil assets, as they have not performed to plan.

In our blog update from July 26th, we suggested that investors could sell European-style call options at the $26.00 strike price into November.

We still see limited upside to BHP above $26.50 and repeat that suggestion to enhance portfolio returns for investors holding BHP shares.

BHP

In late May our Algo Engine started flagging the “higher low” structure in large cap resource names, including a number of resource specific ETF’s.

Within the ASX 100, FMG, RIO and BHP were the standout Algo Engine buy signals. In client portfolio’s we allocated towards BHP as our preferred exposure.

Over recent weeks, a rally in Iron Ore prices from US$56 per tone to US$72 per tone, has helped to accelerate the share price advance, and crude oil back at almost $50 per barrel has helped BHP.

Fund managers continue to position in BHP ahead of a potential corporate restructure, as the market speculates on the divestment of the US shale and energy assets, into a  separate listed US company.

BHP reports on the 22nd August .  Assuming FY17 total dividends of $1.10, BHP trades on a 4.7% yield. EPS forecasts into FY18 should remain similar to FY17 at around $1.70 per share.

We’ve been buyers of BHP on the recent pullback to $22.50 with an upside target of $25 – $26.

We advise, either locking in gains within this price range, or alternatively, selling at-the-money call options into September.  

Our Algo Engine flagged a buy signal in BHP on the 3rd of May at $22.50. The stock is now trading at $23.50 and has developed a reasonable support structure, as displayed in the chart below.

We stay exposed to BHP on the long side and look for further upside. Apply stop-loss below $22.50.

With the recent sell-off in commodity names, the Algo Engine has triggered buy signals in a number of big and small cap companies.

Our preferred resource allocation remains BHP, over other alternatives. However, it’s worth taking note of the recent buy signals in RIO, FMG, IPL and in OOO, the BetaShares Oil ETF.

We look to take profit in BHP at $25, after buying at or near $22.50.

Shares of BHP have opened firmly above $24.00 as overnight comments from Andrew Mackenzie confirm the company is likely to spin off some assets in the near-term.

Mackenzie was addressing a major mining conference in Barcelona when he gave the strongest indications yet that BHP might be giving ground to New York hedge fund Elliott Management’s aggressive bid to break up the mining giant.

As such, we see this development as underpinning the stock, even as Crude Oil and Iron ore prices remain in the lower end of their 6-month trading ranges.

The ALGO engine triggered a buy signal for BHP on May 5th at 22.50. Over the last few days, we have suggest taking profits on long positions above $24.00 and looking to re-enter at lower levels.