Diary: miners, shp

Mining sector
I was becoming concerned that I was over-exposed to the mining sector, so I decided to perform a break-down, by sector, of the  Footsie. Here are my results:

Row Labels	Sum of MarketCap	%age
AEROSPACE AND DEFENCE	25312	1.7%
ALTERNATIVE ENERGY	3678	0.3%
AUTOMOBILES AND PARTS	3068	0.2%
BANKS	186295	12.9%
BEVERAGES	68379	4.7%
CHEMICALS	3819	0.3%
ELECTRICITY	12680	0.9%
FINANCIAL SERVICES	15579	1.1%
FIXED LINE TELECOMMUNICATIONS	14101	1.0%
FOOD AND DRUG RETAILERS	46186	3.2%
FOOD PRODUCERS	38793	2.7%
GAS - WATER AND MULTIUTILITIES	62908	4.3%
GENERAL INDUSTRIALS	6598	0.5%
GENERAL RETAILERS	15906	1.1%
HEALTH CARE EQUIPMENT AND SERVICES	5238	0.4%
HOUSEHOLD GOODS AND HOME CONSTRUCTION	24444	1.7%
INDUSTRIAL ENGINEERING	6162	0.4%
LIFE INSURANCE	46794	3.2%
MEDIA	38624	2.7%
MINING	226938	15.7%
MOBILE TELECOMMUNICATIONS	89939	6.2%
NONLIFE INSURANCE	7469	0.5%
OIL AND GAS PRODUCERS	200809	13.9%
OIL EQUIPMENT - SERVICES AND DISTRIBUTION	7560	0.5%
PERSONAL GOODS	5670	0.4%
PHARMACEUTICALS AND BIOTECHNOLOGY	121155	8.4%
REAL ESTATE INVESTMENT TRUSTS	16091	1.1%
SOFTWARE AND COMPUTER SERVICES	3686	0.3%
SUPPORT SERVICES	33701	2.3%
TECHNOLOGY HARDWARE AND EQUIPMENT	8015	0.6%
TOBACCO	77702	5.4%
TRAVEL AND LEISURE	24222	1.7%
(blank)
Grand Total	1447518	100.0%

There is likely to be some distortion in the results, as BLT (BHP Billiton), for example, has significant exposure to the oil sector, despite being classified as a miner. Resources make up about 30% of the entire market capitalisation of the Footsie (I'm lumping mining and oilies together); which, as Ben Graham would say, "is significant if true". Look at how very little exposure the Footsie has to sectors like retailers; which you'd think still has some relevance to the UK economy. I'm not making a short-term prognostication about the direction of commodities, but it's interesting to note what I think is a micro-economic wheel that has been set in motion: anecdotally, it seems to me that it is relatively easy for miners to raise capital. So you can see, even now, that the seeds for the destruction of the commodity sector as being sewn even today. There are other common-sense arguments for being bearish on commodities: the 30% statistic for starters, and the fact that ESSR (Essar Energy) floated last year, making its way straight into the Footsie. Like I say, I'm not making a short-term prognostication. It's entirely possible that the commodities bull market has another decade to run.

For the record, I have 14% exposure to the resources sector.

SHP: Shire - Pharma and Bio - 2062.9p/£11.6b
Time for a quick squint at a growth share. According to Google:

Shire plc (Shire)is a specialty biopharmaceutical company that focuses on meeting the needs of the specialist physician. Shire focuses its business on attention deficit hyperactivity disorder (ADHD), human genetic therapies (HGT) and gastrointestinal (GI) diseases.

 Here are some stats:

SHP
	Current	5 yr median
PER	21.2	18.2
ROE	20%	23%
Operating Margin	23%	15%
Gearing	32%
z-score	4.25
Net cash/mkt cap	-5%
Net cash/net profit	-1.1
NCAV/MKT	-8%
Insiders	£8m
5-year growth:
-revenue	23%
- operating profit	45%
- EPS (adj)	27%

Looking at the boards, there was talk of a bid in July 2011, which is a negative. The boards are generally very quiet. The RNS issued on 11-Aug-2011 looked positive, although you'd probably expect that from a growth company. Here's some highlights:

• another strong year, EPS up 26%
• preparing for for US launch of Firazyr, and hoping for FDA approval in August
• proprietory tech platforms in development
• R&D increased to $355m for 6 m/e Jun 2011 (19% of product sales)