Buy Hold Sell: Resources on a run

Fortescue Metals Group

Hall: It's a sell. I think it's a company I really admire they've done great things, Andrew Forrest is the Essington Lewis of our day, but the stock's run too hard, I think there's too many uncertainties in China, it's a sell.

Johnson: It's a sell from me as well, it's a stock that we've massively underestimated over the past decade, done a fantastic job of turning things around. We too are very concerned still about the demand from China, and in particular the oversupply that's in the industry.

South32

Johnson: It's a stock that has been a really important holding for us, we still own it, so I'm going to say buy, we have halved our position at these prices though, it has run very hard and I think now you're starting to be dependent on higher commodity prices rather than just the cost out story. The cost out story was something I was comfortable in, higher prices, less so.

Hall: It's a sell, there's too much uncertainty in the world, the valuation is too high, the prudent thing is to sell it, take the money.

Newcrest

Hall: It's a sell. It's much more expensive than the small and mid cap goldminers, that's where you want to have your money, come a consolidation phase of gold, and I think Newcrest is absolutely expensive as well.

Johnson: I will say hold on Newcrest, because I think that exposure to gold in your portfolio is an interesting thing to be doing, and it's the largest player in Australia, one of the safer ones. I think it's a space that if you want to invest at the smaller end you need a lot of specialist knowledge, for me it's a hold.

Aurizon

Johnson: I'll say hold on this one as well, I do worry about it because people view that revenue stream as certain for it, and I think it is completely dependent on the viability of the underlying mines, and I worry about those a bit, but the yield is enough for me to say hold at these prices.

Hall: It's a sell. It's fully valued or over-valued, it's got quite a lot of debt and it's very sensitive to economic conditions which could change rapidly, so again, take the money, put it in the bank.

Doray Minerals

Hall: I like a company called Doray, which is a gold miner in Western Australia, it's run by a guy called Allan Kelly, very brilliant guy, the stock's fallen in half over the last few weeks, because of some technical issues and a financing they had to do, but I think that stock's going to double very quickly.

Macmahon Holdings

Johnson: Little mining services company called Macmahon Holdings which once was big and is now small, we think they've got enough contracts there over the next five years to more than justify the current share price. Very strong balance sheet with a lot of cash on the balance sheet, some issues that need to be addressed no doubt, but I think the share price is overestimating those risks.

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Recorded on 9/11/2016