We put out an alert on Thursday morning saying we would sell NCM at $29, we were inundated with questions by members to explain our logic, especially as the stock opened at $27.60. The selling price was based on the valuation we attributed to NCM based on Newmont’s (NEM US) bid plus the risk of an unlikely breakdown between the 2 miners, movements in the gold price and the $A. At yesterday’s open NCM was theoretically valued around $29.25 assuming the deal proceeds as it’s a script bid the pricing is fluid but we saw no reason to sell the stock at such a steep discount, we would rather take the flagged $1.10 fully franked dividend and let the share price converge to fair value – fingers crossed gold doesn’t collapse over the coming months!
- We will consider taking profit on NCM when/if the risk v reward makes sense.
- Based on overnight moves in Newmont and the $A, the value of the bid this morning is $28.50 i.e. very fluid!
MM remains long and bullish NCM and the gold sector
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