Talking his own book or actual believer?

One of the interesting problems out there is that we do get cases like this. Where if the guy’s a crook he’ll be doing the one thing and if he’s honest as the length of an Icelandic summer day he’ll be doing exactly the same thing. So, how to decide which he’s being?

A Hargreaves Lansdown investment expert who held shares in Sirius Minerals urged savers to stick with the mining business just months before it was plunged into a financial crisis that saw 75% wiped off its share price.

In an article on the website of Britain’s largest do-it-yourself investment service, Nick Hyett urged people to be patient as Sirius scrabbled to secure finance for its mine in Yorkshire, which will extract the fertiliser polyhalite.

Hyett said that although 2018 had been a “painful year”, with Sirius’s share price dropping, the company had had “significant successes” and “construction was well under way” on the mine. He added that thanks to research showing the benefits of polyhalite in agriculture, there “should be plenty of demand for what Sirius will eventually be producing”.

The share price jumped 2.7% on May 14 — the day the article was published. Since then it has plunged 75%, and closed last week at 2.9p. At their height, the shares were worth 15 times as much.

So, was he just talking his own book? Or did he really believe and have his money where his mouth was?

An interesting way to tell would be to ask what’s his position in the stock today….

8 thoughts on “Talking his own book or actual believer?”

  1. I first heard about this stock 2 years ago and what struck me was that it would be at least 5 years before any of this product would be available for sale, and that would be after massive investment. At that point they wanted the government to underwrite the project. At that point I lost interest. I think it’s just about digging a very deep (therefore expensive) mine under a national park (therefore going to be strangled by bureaucratic and eco nonsense). Why bother? Even then, I thought the odds of the project getting as far as production were laughably low. I was obviously being optimistic

  2. I was going to say it was highly unlikely he was being dodgy. Because any FCA-regulated investment firm is going to have tight personal trading procedures.

    But then I noticed he works for HL. Which typically does not provide regulated advice, but provides marketing material that often looks suspiciously like advice to my cynical eyes, taking advantage of loopholes intended for financial journalism.

    But to be honest I don’t know enough about his specifics to judge.

    It is very possible to honestly believe in something that ends up being a spectacular failure. Particularly when risks are binary and very asymmetric.

    I have no doubt Sirius would genuinely like to open a real potash mine in the north. And the potash is there. But to do it they need a lot of time, money and most importantly government permission, all of which can wreck the economics.

  3. As Herbie says, they have been making progress but first potash is still set for 2021. It’s a lot of risk for the average punter to take, not least of which is predicting what the idiots in government, of whatever hue, will mandate.

  4. Hi Herbie, I also live down the road, in Whitby. I’ve been watching the developments (and went on a tour!), and it’s a 50-year project, nobody should be in it for short term gains, and nobody should be panic’ed out of it due to short term wobbles.

  5. Most of the small investors are locals who *want* it to succeed (local patriotism rather than any expectation of personal benefit). Hence less problem over “National Park” – and my wife and I walked past Boulby (on the coastal path) this summer – less of an eyesore than most of the farm buildings we could see from the path.
    It is – as jgh says – a long-term project requiring a massive capital investment to produce raw material for fertilisers which is relatively close (I know some guys who could walk it – actually I could myself) to a fertiliser factory that used to be the largest chemical factory in Europe
    Until Brexit the UK government cannot.provide support even though it would get a massive ROI through PAYE and VAT.
    There are lots of reasons for optimists to believe in it – whether that belief will be justified I do not know.

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