Friday’s Rabbit Hole

ASX listed Mineral Resources’ (MIN.ASX) stock price has gone somewhat parabolic to a point that, in terms of percentage above its 200 Week Moving Average, it is at the highest end of where it has traded over the past 12 years.

…..that’s a 200 Week, not a 200 Day moving average.

While that 200 Week Average will latently climb higher, probability increases the call for a mean reversion back to that level, or at least an attempt at one.

On a corporate front, it’s timely for the company to use this swelling of its currency (being its equity) to some benefit.

April 16, 2021

by Rob Zdravevski

Karri Asset Advisors

Borrow and Sell when you least need to

’tis the season to focus on the new extremes being exhibited in selected stocks.

Today, I want to discuss Australian listed mining and related services company called Mineral Resources (MIN.AX).

MinRes is a high quality enterprise and managed very well with an extremely competent team. It has a solid (conservative) balance sheet, attractive margins and exhibited ravishing growth.

Currently its price action (I’ll discuss valuations another time) is trading at extremes. The charts below show that MinRes is trading at a stretch above its 200 day moving average (on a Weekly basis) and at 2 standard deviations above its Monthly mean. This doesn’t happen too often.

Previous visits to these levels have married up with oversold readings and peaks in its trending strength.

It’s at this point that investment bankers should be circling and pitch that MinRes either;
a) raise money by offering shares in the secondary market,
b) use its ‘inflated’ stock as currency to make acquisition or
c) borrow cheap debt

December 9, 2020
by Rob Zdravevski

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