When I last wrote on Sirius Minerals (LSE: SXX), the polyhalite miner at the brink of bankruptcy, it looked like the story was all but over. At the time, the company’s board said that an alternative finance proposal involving a debt raise had been unsuccessful. The board encouraged shareholders to allow the all-cash acquisition bid by the FTSE 100 multi-commodity miner Anglo American to go through at 5.5p a share. This development followed a 4.8% drop in SXX’s share price fall to 5.03p, though it has inched back up since.
New investor in the mix
Since then, there have been developments in the Sirius sage. Hedge fund Odey Asset Management just became a shareholder in SXX, buying a 1.3% stake. It earlier held a derivatives position in the company, according to news reports. As a shareholder, it now holds voting rights and intends to vote against the current AAL offer, which it says doesn’t represent “fair value for shareholders in Sirius”.
Additionally, it values the company’s equity at 120% above the board’s offer and says that it will vote in favour of the deal at a price of 7p and above. With many shareholders unlikely to be present at the time of voting, it further adds that those who are present will have “magnified power”.
There’s more. There’s now a Sirius Minerals’ Investor Action Group in place, which includes investors who are trying to raise debt funding for the company. In the meantime, AAL has defended its current offer for Sirius Minerals. In other words, AAL’s buyout of SXX no longer looks as much like a done deal as it did a week ago.
Lucrative alternatives
So where does it leave the existing investor? The plot has thickened, and now, of all times, is not the time to sell. I’m holding, for sure. But I’m also looking at other investing opportunities that promise gains.
For capital gains, high-performers in the FTSE 250 or relatively new entrants to the FTSE 100 are good stocks to consider, to my mind. Consider, FTSE 250 property builder Bellway (LSE:BWY) which has seen an upswing in prices recently. Still, compared to its FTSE 100 real estate counterparts Barratt Developments, Persimmon, and Taylor Wimpy, Bellway’s price-to-earnings ratio is slightly lower at sub-10 times. Since posting a positive trading update in the first week of February, the company’s share price has been on the rise. From the day of the release up to the time of writing, it’s up by 6.2%.
Bellway’s outlook is positive as well, and most analysts put a ‘buy’ rating on it. Further, its dividend yield is superior to the average FTSE 250 yield of 2.8%. At 3.5%, it’s not the most lucrative passive income generator, but given that it’s a promising growth stock, a higher than average yield is icing on the cake.
The real estate sector has just got a Brexit boost, and with green-shoots of recovery in the UK economy becoming evident, I think the cyclical sector maybe in for better times ahead, making BWY a good buy.