Mining “years” from bottom

From the AFR comes some sense at last:

The managing director of Denham Capital, Bert Koth, also defied optimists who have called the bottom for commodity prices.

“We believe we are still two years away from the bottom and then we are going to stay there for at least four to five years,” Mr Koth said. “The market is still a falling knife.”

…”The reason we have a funding crisis [in the resources sector] is because the people who put their money into the public markets have lost it,” he said. “Private equity is not going to close the funding gap.”

Unless they want to lose it of course.


  1. Here we go, Billabong being sued cause they misrepresented earnings and apparently did not inform the market.
    How long before the IO boys come under the magnifying glass.
    Am looking forward to those timely updates on how selling product below the cost of production is sustainable. WW

    Surfwear group Billabong ASX BBG is facing a multi-million dollar shareholder class action over the timing of earnings downgrades that sparked massive share price falls.
    A MELBOURNE retail investor whose $30,000 investment in Billabong halved in value in just over a month is leading the class action.
    Newstart 123, the trustee of the Malone Family Superannuation fund, claims Billabong misrepresented its earnings forecasts and failed to disclose critical information to the market over the course of 2011.
    “Billabong ought to have been aware that its systems were inadequate to enable it to assess and analyse the financial and operating performance of all parts of its global business,” Newstart 123 said in a statement of claim lodged in the Federal Court.
    “Hence it had no ability to estimate accurately the likely earnings or earnings margins for full year 2012.”
    Billabong said it “wholly rejects and intends to vigorously defend the claim”, which is being handled by law firm Slater and Gordon.
    Shareholders who suffered losses during 2011, which could run into hundreds of millions of dollars, are able to join the class action.
    Newstart’s claim focuses on several statements made by Billabong between February and December of 2011, a period of time in which the company’s share price fell from $8.51 to $1.70.
    After forecasting a steady full year profit in February, Billabong downgraded its earnings forecast in August and again in December.
    At the time of the first downgrade, then chief executive Derek O’Neill allegedly told analysts he “did not even want to imagine scenarios in full year 2012 where earnings growth from full year 2011 could only be single digit or even negative.”
    Had more information been disclosed to investors, the effect of downgrades on Billabong’s share price would have been different, the statement of claim says.
    Billabong has made successive losses in recent years and turned down several takeover offers before reaching a deal with private equity firms to refinance the company in 2014.
    Shares in the retailer dropped 0.5 cents to 60 cents.

    • Don’t tell me ASIC may have to put their gin and tonics down and (heaven forbid) examine share dealings made by people connected with the company before the bad news came through? What, with the cricket and all they must be rather short of free time right now..

      • Rob, looks to me as though ASIC are being forced to have a bit of a squiz, under the guidance of some prosecuting lawyer.
        Yesterday it was Myer, today, Billabong, hopefully it is the start of a roll.
        Once shareholders and the lawyers get the gist of the essence of what is required as reporting and outlook statements of ASX listed companies, I’m sure there will be plenty of interest. WW

    • What about the guidance from banks as they gorge on short term foreign borrowings. CBA past $95 is a very courageous play in my view.

      Interesting times ahead indeed.

      • “What about the guidance from banks as they gorge on short term foreign borrowings. CBA past $95 is a very courageous play in my view”

        – – – – – getting close soon to a good shorting bet ?

  2. The AIIB offers real opportunity for regional infrastructure development. But will take few years to fully realise.

    Those companies well positioned will ride out the current commodity unwind to be prime place for AIIB developments.

    Australia must be on board.