BHP Highly Speculative risk rating

Friday, Jan 04 2019 by

Can anybody explain to me why BHP (LON:BHP) has a highly speculative risk rating. It is a significant part of my portfolio and I wonder whether I should reduce what has been a good long term hold for me with a good dividend.

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5 Posts on this Thread show/hide all

aflash 4th Jan 1 of 5

Cannot explain.

However can tell you that on the New York exchange version it has 'Balanced' risk rating.

I recently increased my holding in anticipation of the 10 Jan x-div Special cut-off and will review the situation depending on price action afterwards.

Before the risk-ratings introduction BHP dropped to 632p in February 2016 and carried
a Value rating of 94 and Quality of 85.

Today that is Value 67 Quality 98 in London and in New York Value 77 Quality 99.

It has been better explained elsewhere that the Cyclicals have their best metrics at the top of the cycle. The top was clearly 2011, the jury is out on subsequent events.

I have always preferred BHP to RIO since the latter overpaid for Alcan. BHP was better for me when it had more oil assets but it is still diversified, a subsidiary recently mined one of the largest diamond finds in recent times. So I shall be sorry to see it go but value is probably up with events since the activist forced divestment of shale-assets.

As an aside there are several computer-glitch anomalies between the London data base and the statistics for dual-listed stocks in Amerika. One example is BATS (British American Tobacco) which has a low Quality rating of 44 in London but BTI ,its New York version, a Quality rating of 59.

An annoying feature is the ex-dividend dates are often not provided in the American data-base, I have to go to other sources.

It partly depends on the type of N.Y. listing.

BHP is the best version, not only is the date listed but it is the same as in London. Lower down the scale the ex-divi date is a day earlier in New York to allow the back-office to catch up.

Hope this helps.

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Nick Ray 5th Jan 2 of 5

Stocko thinks BHP (LON:BHP) has a 1 year volatility of 77.8%.

By my own calculation it is nearer to 30%.

My guess is that their numbers have been confused because BHP used to have the EPIC/TIDM BLT until 2018-11-23.

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digitaria 5th Jan 3 of 5

I was poised over the sell button for BHP on Thursday and then it struck me that, in a market when investors are taking refuge in diversified multinationals and eschewing UK-focused, perhaps the likes of BHP is exactly what I should be holding on to.
Since I have a modest holding of BHP already, I bought some RIO instead. And they went up 4% on Friday. Which was nice.
However, big miners are awfully volatile and not really buy-and-forget material. A presidential tweet mentioning China can have disproportionate effects on the price. Then again, both of the above have very respectable yields, as long as earnings continue to support them.

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nickwild 8th Jan 4 of 5

Thanks for your helpful replies.


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nickwild 8th Jan 5 of 5

Reply from tech team.

Reply from Chris
Hi Nick,
Yes, the Highly Speculative rating is coming from the volatility score.
Why BHP is getting such a high score, I am not sure, however I know that securities that aren't listed that long can generate volatility scores that are not accurate. Possibly the recent change of the ticker is having a similar impact. I will ask one of the analysts tomorrow morning to confirm.
Regarding not getting your message to file under BHP. You are right, I can't do it either. It must be a bug in the system. I will raise it as a ticket for the tech team to look at.
Let me know if you have any more questions.


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