S32 The Volatile One

Quite the volatile stock, is South32. In less than a year they have seen a 62% drawdown followed by an 89% rally. As we see on the chart, this sequence means an investor who bought at the peak has still lost a lot of money.

Winding Up A Company Is Shareholder Friendly

An interesting article here on Woodside

http://www.bloomberg.com/gadfly/articles/2016-03-23/woodside-needs-to-spend-on-reserves-before-its-gas-tank-runs-dry

I was drawn to this quote:

 In the absence of organic growth from exploration, petroleum companies have to buy other people's discoveries instead.

No they don't. There is nothing commanding a board to spend shareholder wealth to buy production at a level above the expected selling price. If this condition persists, let the oil fields run out and the company can be wound up. The reason it never happens is it means the board and management and employees will be out of work, but shareholders are in the business to make money, not to employ people. 

Gold producers, in particular, are notorious for spending shareholder wealth on replacement production which destroys wealth, and along the way the board and management get paid.