Long Vale into 10/17/14 Ex-Div
Historical trends from the past 2 years shows heavy buying with a ~10-15% run in Vale heading into Ex-Div. The stock price is trading around a multi-year low in the low 12s. It has tested this level and traded higher with strong support multiple times (Jul13, Jan14, Mar14, Jun14). At a current price of ~$12.4 the yield on the semi-annual 10/17/14 dividend will be roughly +3.3%. Fundamentally Vale is trading at a depressed multiple with a iron ore trading at a 5-Yr low. Morgan Stanley forecasts a rally in the final quarter which follows a similar prediction last week from Vale (VALE +0.8%), the world’s largest supplier, which said prices may be poised for a rebound to as much as 1100/TON by year-end because of declining inventory at ports (seekingalpha.com/news/1982925-iron-ore-rebound-seen-by-morgan-stanley-as-vale-sees-100-ton).
Update 9/15: Vale announces partnership with Cosco which will lead to lower shipping and overall costs in China. For two years, Vale SA's Valemax mega-ships - designed to cut the costs of transporting iron ore to China - have not been allowed to dock at Chinese ports, stalling the miner's $4 billion strategy. But the argument is now moot because Vale on Friday announced a deal with Cosco, and analysts forecast the Valemax ships will soon be docking in China. If they are right, it will mark a long-awaited breakthrough for Vale, allowing it to better compete with Australian rivals BHP Billiton Ltd and Rio Tinto Ltd (mobile.reuters.com/article/idUSKBN0HB00N20140916?irpc=932)
Update 9/16: Vale to Benefit From Tax Credit Given by Brazil’s Mantega. The government will give a tax credit of 9 percent of earnings abroad to all Brazilian industrial companies, including miners such as Vale SA. (bloomberg.com/news/2014-09-16/vale-to-benefit-from-tax-credit-announced-by-brazil-s-mantega.html)
***Investing/trading in Vale since 2013. Entered new long position at $12.6 and accumulated through the low of $12.10. Expecting to close the position in a couple weeks between $13.5 - $14. I might look to short Vale heading into earnings on 10/30 if between $14 - $14.5 in the middle of October. Short trade would be based on historical trend following the dividend payout/heading into ER, as well as the faster than anticipated decline in iron ore price this quarter.***
Update 9/15: Vale announces partnership with Cosco which will lead to lower shipping and overall costs in China. For two years, Vale SA's Valemax mega-ships - designed to cut the costs of transporting iron ore to China - have not been allowed to dock at Chinese ports, stalling the miner's $4 billion strategy. But the argument is now moot because Vale on Friday announced a deal with Cosco, and analysts forecast the Valemax ships will soon be docking in China. If they are right, it will mark a long-awaited breakthrough for Vale, allowing it to better compete with Australian rivals BHP Billiton Ltd and Rio Tinto Ltd (mobile.reuters.com/article/idUSKBN0HB00N20140916?irpc=932)
Update 9/16: Vale to Benefit From Tax Credit Given by Brazil’s Mantega. The government will give a tax credit of 9 percent of earnings abroad to all Brazilian industrial companies, including miners such as Vale SA. (bloomberg.com/news/2014-09-16/vale-to-benefit-from-tax-credit-announced-by-brazil-s-mantega.html)
***Investing/trading in Vale since 2013. Entered new long position at $12.6 and accumulated through the low of $12.10. Expecting to close the position in a couple weeks between $13.5 - $14. I might look to short Vale heading into earnings on 10/30 if between $14 - $14.5 in the middle of October. Short trade would be based on historical trend following the dividend payout/heading into ER, as well as the faster than anticipated decline in iron ore price this quarter.***
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.