back in the cellar againIt is obvious that as a buy and hold this stock has been a disaster. Trading in and out would have been the way to play this name so hats off to those who have done so. I originally bought in at $8 then sold at $15 did ok, missed the big move and bought back in after the move to the current trading range 30's to 40's and have languished ever since. It has never reached its target or if so very briefly then heading back to low 40's or 30's. The opportunity cost of tying up this capital has clearly been a mistake. Sure there are the dividends but they haven't kept up with the expectations of shareholders and with the acquisition of Harry Winston any chance of a dividend increase was lost. The Harry Winston acquisition was not understood or accepted as a sound move by market analysts and the stock price was punished for that. We are still being punished. It has become clear to me now that the acquisition was made for self preservation more than anything else. Their partner and the operator of the diavik mine could have swallowed them whole at any time but with the Harry Winston acquisition, something Rio Tinto wouldn't want, it acted as a shield against a hostile takeover plus it gave them life after diavik. I have called MarketCall to ask for professional opinions from the fund managers and most of the time they won't even take the call because they don't know how to judge this stock. Is it a mining stock or a retailer? When I did get them to take the calls on air they echoed exactly that sentiment. I had always hoped that even by asking them about the stock it would trigger some interest on their part and encourage them to take a closer look at the stock but at the end of the day it really doesn't fit in many fund models. That has been part of the problem because these guys are the heavy hitters in the stock market and we haven't converted them into Aber lovers even though I have no doubt that the diavik mine is a world class asset with a long reserve life and they also have vast unexplored properties that are waiting for new discoveries. So the shield that protects them also hurts them. This may change in the future because many of the analysts are still in the wait and see mode and the stock will languish until it gets accepted fully for what it is. In the end I have no doubt that the value will be realized and that is what keeps me hanging on. It doesn't change the fact that holding this stock is becoming increasingly frustrating and I must admit I have been looking for my exit strategy. Another poster thinks the dividends are going down - they are not - $1 US annually paid quarterly. The US dollar has been eroding causing the decline in the amount received in your account. Who buys a mining stock taking with it the added risk of owning a mine for a 3% dividend? no one, especially not the fund managers.
I have kicked myself for not selling this stock so many times I can't count. As a trader there has been alot of money to be made with this name because the trading range has been so consistent. When it hits the mid to high 40's sell then buy it back low 40's or better yet in the 30's - something I've only managed to do once. My cost now $39 but I thought with the high-grade ore going through the mill now it would pop it out of the established trading range on this years earnings report. The performance of the share price has not kept pace with the mines performance as I'm sure we all expected it would. Now how low will we go - will we see the 30's again or will we manage to claw back to the mid 40's.
This has been and continues to be dead money but I still love the name. It's like a rocky relationship with a girl - you love her one day hate her the next but in the end you still love her and the make-up sex is so good.
Good luck to all.
P.S. I have been a frequent visitor to this bullboard for many years but have never posted here. I have enjoyed reading the posts of all the regulars and have benefited from the information that has been posted here. Thanks for that. Especially Borson your tireless optimism for this stock has helped me to remain positive but I have appreciated hearing all sides of the story from others too.
OceanRanger1