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Randgold - panic, panic...back to its early April levels!

By Chris Bailey | Thursday 10 May 2018


Disclosure: I own shares in one or more of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


What a funny day today for some of my FTSE-100 preferred names. Carolyn McCall was never off my Christmas card list, but I might risk a present now, after her soothing words in ITV's (ITV) trading statement today where online and Studios romped and the World Cup shines brightly for the near-future. That's perfectly inline with my hopes as discussed in my last write-up HERE. And with Liberty Media flush with Vodafone's (VOD) cash you never know whether it might build up its stake materially.

Similar RBS (RBS) is responding well to having to hand over less taxpayer's bailout monies to the Americans for transgressions undertaken by at least two management teams ago in the US operations at/around the time of the global financial crisis. As I noted in my article of a couple of weeks ago, the dividend hinterlands really are getting closer. I still think the share goes 3 quid plus. So all good there. But what about Randgold (RRS), which I loved up AGAIN at the UK Investor Show?

The shares are not happy today and - as the headline of the piece notes - we are back down to the levels the shares were at just before the UK's premier investor event after today's first quarter numbers. Is there a problem?

The short answer is 'no'. Randgold is always a great one to disclose information about its mines and issues such as the now resolved strikes at its Cote d'Ivorie mine did have an impact on production and profitability during the quarter...but the anticipated future ramp gets it back to its full year targets. Given the high management credibility built up with this name, I would have thought the market would have cut them some slack today on this issue...but apparently not. More fool Mr Market then.

Randgold retains all the attributes I like: high grade mines, cash flow generation, cash cost control and mine extension scope. There are still the previously discussed issues with the DRC's mining codes but that is just part and parcel of mining anywhere. And, of course, the direction of the gold price is going to have some influence too. Gold feels cheap to me but I appreciate there are different views.

All I do know is after well over a decade of investing in the Randgold story a big quarterly numbers fall is typically more an opportunity than a threat...and if you had been on an isolated island for the last month without access to any information you would probably wonder what all the angst is about. My bromance with the stock continues.


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