The MSM has become obsessed with the notion that BHP is cheap. Fairfax is typical:
In the case of BHP, the stock is the cheapest it’s been in at least 25 years, according to Maple-Brown Abbott research – at least on a price-to-book measure. The chart below tells the story.
There may be more asset write-downs to come, but the valuation picture is not going to change a whole lot, the fund manager reckons.
The big miner’s share price has been sliding since 2011 and now trades at its lowest in almost seven years.
Make of that what you will!
Here’s what to make of it? The book value is massively inflated which means what lies ahead is gigantic asset impairments. What price do you think BHP will trade at with iron ore in the $20s?
Is Looksmart or Pets.com cheap?
