Sirius Minerals (SXX), the new share price bid, and what it can teach me

When an investment like Sirius Minerals (LON: SXX) becomes one of your worst ever, what should you take from it?

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After the failure to get its funding round off the ground and the collapse of its share price, Sirius Minerals (LSE: SXX) became one of my worst ever stock investments – it might even be the actual worst, but I don’t keep such records.

I have, thankfully, suffered very few wipeouts over the years I’ve been investing, because I only very rarely take on risky investments like this, and whenever I have done it’s always been relatively small amounts of money.

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Anyway, I haven’t got round to disposing of the shares yet, and I really wasn’t expecting to read headlines like ‘The Sirius Minerals share price is up 35%’. The company is in talks with Anglo American regarding a possible takeover offer. If talks go well, Sirius management can see themselves as recommending the offer, though there’s nothing certain yet.

The takeover price being talked about at the moment is 5.5p per share, though as an immediate result of the news the shares spiked as high as 5.7p. Why would people pay more on the open market than they’d get from the initial Anglo offer? Presumably there are some optimists out there who hope the negotiations will result in a higher offer, or that a second bidder might enter the fray.


Unfortunately, I think such optimism is misplaced, as whoever (if anyone) takes over Sirius assets will have to find a further $3bn or so to develop the project as far as production. To be honest, I think we’re lucky to get anything back – and it provides me with a minor reward for procrastinating for so long and not having dumped the shares yet.

There are two things that really do please me about the latest development. One is that it looks like all of the efforts put in to date will not be wasted after all (fingers crossed, don’t want to tempt fate before there’s ink on paper).

But even more, the prospects for a significant number of jobs in an area that could certainly use them has considerably improved – that deprivation would have been much worse than my fairly minor loss of cash.

Now what?

But what will I do, both with my Sirius Minerals shares and with my future investments in an effort to avoid a similar disaster in the future? The first question is easy to answer, and I’ll just hang on to them and see how the Anglo American thing turns out. If it results in a recommended and accepted offer, it should result in my shares being sold with no effort on my part.

What about how to avoid making a similar mistake in the future? Well, the bulk of my investing in recent years has been in safe dividend-paying stocks, with only the occasional foray into smaller growth candidates. And I’m going to keep it that way.

I might be a boring old man these days, but what if if I see another prospect similar to Sirius Minerals in the future? A bit of high-risk excitement can make me feel young again, so I may well go for it.

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Alan Oscroft owns shares of Sirius Minerals. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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