Oh, for that Midas touch

[miningmx.com] — I DOUBT too many punters have heard of the HRI. Until yesterday I had never heard of the HRI.

According to my erudite colleagues at www.miningmx.com, the HRI or Hasenfuss Reverse Indicator is one of the surest ways to pick commodity stocks. The cheeky buggers are even thinking of creating an investment tool based on the HRI exclusively for the site.

Let me go back a little here. I have a tendency (perhaps it’s a habit, perhaps it’s a vice) to dabble in commodity stocks. A little flutter here and there…nothing too serious.

Naturally I like to chew the fat with some of the best mining writers in the country – you know bounce off my investment strategy, gauge my chances of making a fortune. But mostly they are diplomatically dismissive of my oft obscure dabblings: “Marc, you’ve acquired another pile of crap.”

Seems, though, that the Miningmx chaps have been paying attention to my personal stock-picks – including Fin24 editor and respected mining scribe David McKay.

Based on my ruminations and rants around resource stocks they have come up with the Hasenfuss Reverse Indicator (HRI).

The premise is basically whatever resources stocks Hasenfuss is buying should be sold or avoided at all costs. Come to think of it I probably tarnished my own reputation by once confessing (after a few glasses of plonk) that I once owned shares in glorious ventures like Gazgold, Benoni Gold, Consolidated Mining Holdings and Gefco.

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But fine. I can live with that. I remember in the late nineties (when I worked for Business Report) I penned a weekend column for Bruce Cameron’s Personal Finance in which I declared my determination to back Rainbow Chickens – an untouchable 18c/share at that point – as a turnaround play.

I could not walk past the St George’s Mall coffee shops without being ‘clucked’ at by professional investors and other journos. But the clucking soon died away, and I enjoyed the silent reverence (okay, I exaggerate) that accompanied my post-prandial strolls as the Rainbow share price clawed its way back.

Naturally I sold Rainbow (which consolidated its shares) way too early, but still probably made enough profit to pay off my 487 parking fines.

But let’s assume I really do have the reverse Midas touch when it comes to resources, then the HRI is going to be a wonderful sounding board for the many punters with a penchant for mining stocks.

If the HRI was to be constituted today, the ‘index’ and respective prices paid would comprise:

Sallies (39c)

Sallies Debentures (55c)

Village Main Reef (175c)

Anglo Platinum (35925c)

Admittedly Sallies and Village don’t really inspire too much enthusiasm at the moment. But I’m prepared to wait, and – in the instance of Village – will have to pitch in a few more bob to give Mr Swanepoel some fresh capital to play with.

As regards Sallies, I’ll comfort myself with the presumption that I probably paid less for my shares than retail tycoon Christo Wiese did…

I think what really got my dear colleagues guffawing and subsequently mulling the HRI was my admission this week that I sold out of diamond miner Trans Hex at 550c (I bought in for 700c last month).

Yes, selling at the very bottom is always good for a belly laugh. Of course, my selling Trans Hex undoubtedly signals – according to the principles governing the HRI – that the long ailing diamond stock has finally bottomed. In other words Trans Hex is now priced for accumulation…

In any event, I used the measly proceeds from Trans Hex to buy Angloplat at 35925c (yes, I have the broker’s note to prove it). What an inspired move (even if I say so myself). Anglo Platinum scuttled back over 40000c yesterday. Hah!

Bring on the HRI!