4.68 -0.11 (-2.3%) Sell

HBM investors take a massive hit

13 min read

HUDBAY MINERALS INC. (Foreign) has destroyed investor wealth today. It lost -2.3% to close at 4.68. During the last week it lost -2.7% and saw a maximum drawdown of -3.9% before bouncing back.

[Themes containing HBM]

Buy-and-Hold investors in HBM experienced a maximum drawdown of -30.58% over the last three months. It returned +0.65% during this flat trending period. There were no long signals during this period. However, the short signal was not profitable and lost investors -0.65%.


HBM has been underperforming the SP500 index in recent time, after having outperformed till 17 Jan, 2018. Over the last 2 years 11 months and 10 days, HBM underperformed the SP500 index on 51% days.

During the last three months HBM delivered losses on 61% days. However, it still managed to end this period in a profit. It's best return during this period (of +23.53%) was on Thursday, 1 Nov, 2018. While it's worst loss in the same period (of -7.58%) was on Wednesday, 24 Oct, 2018. There was initially a bullish trend during this period which started on 17 Sep, 2018 and went on till 20 Sep, 2018. The bullish trend returned +11.41% to investors. This was followed by a bearish trend that started on 16 Oct, 2018 and ended on 24 Oct, 2018. This bearish trend lost -23.68% of investor capital.

HBM had 3 profitable and 9 loss making months over the last year. During the last year, HBM underperformed SP500 index on monthly return basis. HBM significantly outperformed SP500 index in Nov 2018, when it returned +29.92% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. HBM had a longer winning streak of losing months than SP500 index. It went down in 4 straight months (from May 2018 to Aug 2018) during which period it delivered -33.69%. It is interesting to note that both HBM and SP500 index significantly outperform during months when quarterly/annual results are announced.

"All intelligent investing is value investing - acquiring more that you are paying for. You must value the business in order to value the stock.

HBM is becoming less volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in HBM's volatility from 18 Sep, 2018 to 5 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 25 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that HBM has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.

HBM has more chance of extreme outcomes than the SP500 index. Therefore, HBM must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than HBM.

On a general note (since you are interested in HBM), two mid cap instruments that deserve special mention are ABMD and AMD. They have significantly outperformed the overall market.

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