Amid the volatility and falling share prices check out the strength of Rio Tinto. We have a few thoughts and a helpful graphic from our friends at ActivateAlpha….
First, let’s go back a week or so. We noted a few things……
1. The ultimate metals/mining trader Ivan Glasenberg of Glencore apparently approached Rio Tinto about a merger. Now this fella sold YOU his Glencore IPO paper 30% higher than it is today. We reckon he’s pretty good at timing trades and obviously he thought valuation levels in recent weeks were attractive enough to merit a call to Tio Tinto which was politely rebuffed.
2. The FOMC minutes last week surprised people in that the Fed seems to be watching faltering inflation and events in Europe quite closely i.e. lower rates for longer, weaker dollar and more reflation efforts.
That looked like a reasonably helpful backdrop for the unloved mining sector and its real assets. Then we saw this graphic from ActivateAlpha showing an improved risk profile along the x-axis(moving left to right) and potentially not reflected in the share price(Opportunity zone and under performing on y-axis). The graphic is dynamic and has been paused on October 3rd in a 3 month time-series which is continuously tracking 20 different risk variables in the Composite Score:
You see it’s not all bad news and a systematic approach to risk tends to strip out the noise and deliver very nice opportunities.
**Disclosure: This writer has a commercial interest in ActivateAlpha as its founder.
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