Sibanye Stillwater buys Brazilian mines: The H-Factor score

Sibanye Stillwater announces that it’s buying Brazilian mines for electric vehicle batteries.

Today I came across an announcement on Moneyweb regarding Sibanye Stillwater (JSE Code SSW).

According to the article, Sibanye Stillwater has agreed to pay $1 billion in cash for one of the largest nickel sulphide mines in the world.

This deal highlights the race to supply battery metals to the electric vehicle sector. Nickel is traditionally used in the production of stainless steel and increasingly has become a key component in lithium-ion batteries. Elon Musk apparently appealed to nickel producers a year ago to “Please mine more nickel”

SSW is one of the JSE listed companies that have one of the best “Avoid the Human Factor” (Or H-Factor) score at a probability of 6.1% of SSW not being able to deliver the growth implied by its share price.

As per the above screenshot taken on October 26 2021, of New Age Alpha’s online Human Factor Score tool (available for free by registering on we can see that the Human Factor Score for SSW was 6.1%.

The score of 6.1% reflects that SSW has a 93.9% probability of being able to deliver the growth implied in their share price.

We at Global & Local Asset Management like looking for miners that mine resources that are actually required for industrial usage, like nickel and uranium. So, in fact, we like the deal SSW has announced and looking at SSW’s H-Factor score, we believe they are able to deliver the growth implied by their share price.

Although I do find it quite interesting (or maybe it’s my imagination running away with me here!)…. 

That SSW announces such a purchase in order to be able to supply components to the electric vehicle battery market a year after Elon Musk asked the nickel miners to mine more nickel (According to the Moneyweb article).

Now we know that these corporate acquisitions take a long time, as they should. Imagine negotiating a deal where you are going to transfer $1 billion (That is $1,000,000,000) over to somebody, where that $1 billion belongs not to you but to your shareholders! You would take a long time to ensure that the close to R15 billion (At rand to US dollar current exchange rates) is being spent wisely.

I can imagine Elon Musk picking up his smartphone about a year ago and speaking to Neal Froneman (CEO of SSW) and saying something like “Hey Neal, do you know any nickel mine that SSW can buy, we need more electric vehicle batteries to keep our production lines moving.” To which Neal replies, “Hey Elon, nice to hear from you again, let me see what I can do for you, there is maybe this one mining company I think maybe in Brazil, no promises Elon, but you know, let me make a few calls!” 

Tesla, according to the Avoiding the Human Factor Tool (herewith below), scores at a probability of 33.4% of not being able to deliver the growth implied by its share price.

The factors around the potential for Tesla to deliver can be quite interesting in that:

  • The high oil price at the moment may push many consumers who are looking at a new car towards electric vehicles that Tesla builds (this is good for SSW as well!).
  • The shortage of semi-conductors may reduce the number of cars Tesla can actually build in the months to come.

Avoiding the Human Factor

The Human Factor (H-Factor) is an actuarially based portfolio tool, developed by New York-based asset managers New Age Alpha, aimed at mitigating the risk of human behaviour in stock picking.

The H-Factor does not seek to generate returns by applying traditional methods such as the common smart beta and factor exposure funds we have all come to know. Instead, the H-Factor quantifies and avoids the risk of human biases in stock picking.

New Age Alpha’s Human Factor tool which is free to use scores over 6 000 shares globally including many JSE listed shares.

The probability used the only two things we know for sure about a listed company: the current share price and the profitability of a company as reported on the published financial results. From these two data inputs, we can calculate the probability of the company being able to produce the results implied in the share price based on whether the company has done this in the past 16 reporting periods.

Simply put, the lower the Human Factor Score a listed share has the lower the risk in holding that share. 

Using a probability-based approach to portfolio management  

Using a probability-based approach to stock selection, we identify and avoid the risks present when share investors interpret vague and ambiguous information inherent in share prices in a systematically incorrect way.

The Human Factor Score measures the probability of the listed company generating the growth implied in its current share price.

We at Global & Local Asset Management use the “Avoid the Human Factor” strategy to manage our collective investment scheme portfolios. The strategy focuses on managing portfolios like an actuary and not a portfolio manager.

The strategy comprises developing probabilities which indicate the chance of a listed company NOT being able to achieve the growth implied by its current share price.

The approach taken by Global & Local Asset Management is not to manage portfolios like a portfolio manager but rather to adopt actuarial techniques to asset management.

If you would like to know more about how the Human-Factor score tool works and how we “Avoid the Losers”, then please contact us at Global & Local Asset Management.


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Mauro Forlin

Global & Local Asset Management


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