Glencore

ispookie666

Any one have thoughts on Glencore?
I have a few hundred shares bought when they hit rock bottom. (There is high possibility that the bottom is yet here).
Last time when I sold it was trading at 350p. That's a big discount. The whole thing looks like some dodgy play by hedges.

theGrinch

for a ftse top 100 its movements are wild

worldtraveller

IMHO, the company has always looked "dodgy". The fact remains though, that anyone with a pension probably owns part of it, one way or another.

ispookie666

But credit when it's due
They control 50-70% of copper and zinc output and their trading arm controls 70-80% of commodities.
Strongly believe it's some hedge fund. Someone from inside had bought 1.7 million shares

InvestInPoker

ispookie666 wrote: »

Any one have thoughts on Glencore?

Glen_Clark

Glencore are supposed to be commodity trading experts. But they paid over the odds for Xstrata which doesn't inspire confidence. They have also borrowed astronomical amounts of money to invest in commodities which have fallen in value, which doesn't inspire much confidence either. Consequently Glencore debt has been trading perilously close to junk levels - disastrous for a trading company.
But if commodity prices rise to the levels of a few years ago, Glencore will quickly restore its profitability.

worldtraveller

The troubled miner and commodities trader Glencore is to cut at least 1,540 jobs as it slashes production of zinc and lead by one third.

In a statement on Friday, the FTSE 100 firm said mining operations in Australia, South America and Kazakhstan would be affected.

The company said the move was to "preserve the value of Glencore's reserves in the ground at a time of low zinc and lead prices, which do not correctly value the scarce nature of our resources".

Sky News

Thrugelmir

Like Tesco's they are overburdened with debt. So will need to rationalise the business. What's going to be left after the restructuring who knows. Safe to assume that the boom in commodities has passed though. The Chinese may simply act like vultures and pick off what they want to buy.

worldtraveller

Thrugelmir wrote: »

Safe to assume that the boom in commodities has passed though. The Chinese may simply act like vultures and pick off what they want to buy.

Personally, I've been drip feeding into commodities via one of my favourite funds, First State Global Resources, fairly heavily over the past month or so on dips. Clearly I don't see any commodity "super-cycle" push upwards anytime soon, but I'm positioning now for that to happen in a few years time and look at it as a medium-long term investment.

My main rationale is, as we've seen in the past in this type of market, is that in a slump production is severely curtailed; plants are closed, or mothballed; new projects are put on the back burner, or shelved. While factories can add a new production line in weeks, new mines can take years to develop, while older mines take months to shut down and restart. Therefore, as production is reduced, often considerably, it then doesn't take much of an upturn to push prices up higher, very quickly, whilst production tries to catch up again with demand.

Malthusian

They're borrowing huge amounts of money to invest in the most unpredictable asset class in the world. It's certainly not "dodgy" that it's fallen so much, if anything I'm surprised it's not fallen by more.

When the IPO launched the tipsters said it was run by marvellously clever people and anyone who didn't invest in Glencore was clearly too stupid to understand it. Now they're all saying no-one should have invested in it because its business model is incomprehensible and Buffet says "don't invest in what you don't understand". Hah.

worldtraveller

Malthusian wrote: »

They're borrowing huge amounts of money to invest in the most unpredictable asset class in the world. It's certainly not "dodgy" that it's fallen so much, if anything I'm surprised it's not fallen by more.

When the IPO launched the tipsters said it was run by marvellously clever people and anyone who didn't invest in Glencore was clearly too stupid to understand it. Now they're all saying no-one should have invested in it because its business model is incomprehensible and Buffet says "don't invest in what you don't understand". Hah.

I largely agree with your point about "tipsters", which I would term as a pretty accurate description for most of the media hacks, but I would also include most city "analysts" & "economists" in the same vein. The vast majority are largely overpaid, pointless, ivory-towered fools, no better than a racecourse bookie, likely to run off with the bets when he sees a major loss!

IMHO people should do their own research and generally not listen to people that have very little knowledge, or exposure, if any, to the global commercial world.