Hedge Fund Boosts Stake in Glencore
19 August 2015 - 6:00AM
Dow Jones News
LONDON—U.S. hedge fund Harris Associates LP said it boosted its
stake in Glencore PLC to 4.5%, making it one of the mining and
trading firm's biggest investors as it bets on a rebound in a stock
that has tumbled more than 40% this year.
The move boosts Harris's position in Glencore from 1.53% at the
end of June, and 0.77% at the end of last year, according to
FactSet. While at times Harris has pushed for change at companies
in which it invests, more recently it has tended to buy up large,
passive stakes.
A person familiar with the matter said Glencore Chief Executive
Ivan Glasenberg has held talks with Harris Associates about its
investment in the mining company, without characterizing those
discussions. The investment makes Harris Glencore's fourth-biggest
shareholder, behind sovereign-wealth fund Qatar Holding LLC, Mr.
Glasenberg himself and BlackRock Inc.
The disclosure comes just ahead of Glencore's half-year earnings
Wednesday. Analysts expect it to report sharply lower half-year net
profit. Prices for most of the commodities Glencore produces and
trades, particularly copper and coal, have fallen
significantly.
Shares in the Anglo-Swiss company have swooned amid a global
commodities-price rout. Glencore, the world's third-largest
publicly traded diversified mining company by market value, has
underperformed its other big peers as investors have weighed its
large debt.
While shares finished up 3.6% Tuesday in London, they are down
41% since the start of the year, at 176.10 pence ($2.74) as of
Tuesday's close. That is a much sharper fall for the year than
competitors like BHP Billiton Ltd. and Rio Tinto PLC, the world's
No. 1 and No. 2 miners by market capitalization, respectively.
Stock in the Baar, Switzerland-based company has fallen more
than 60% since its initial public offering in 2011. Glencore shares
hit a record low Monday.
Shortly after the IPO, Mr. Glasenberg orchestrated a $29.5
billion merger with mining giant Xstrata. Mr. Glasenberg has said
Glencore's trading operations would buoy it from the ups and downs
of the mining industry's commodities cycle. As recently as last
year, Mr. Glasenberg was scouting for new conquests: Last October,
Rio Tinto disclosed it had rejected an approach over the summer by
Mr. Glasenberg about a merger.
Amid the current commodities-price bust, Glencore has been
forced to write down about $7.6 billion on its Xstrata deal. Last
week, it said it would take a further $790-million write down on
its roughly $1.5-billion purchase of a Chad-focused oil company
that it bought last year.
Harris, which manages more than $100 billion, calls itself a
"value investor" that looks for companies that are trading at a
significant discount. A company spokeswoman said the fund doesn't
consider itself to be an activist investor.
Still, the fund has assumed an activist role in the past. David
Herro, currently a chief investment officer at the firm, was
credited in 1994 with ousting Maurice and Charles Saatchi from the
advertising agency the two founded, Saatchi & Saatchi. The
business later split into Saatchi & Saatchi and Cordiant
Communications, where Mr. Herro also lobbied for management change.
Saatchi & Saatchi was eventually sold to Publicis Groupe SA,
while Cordiant was sold to WPP PLC.
Write to Alex MacDonald at alex.macdonald@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
August 18, 2015 15:45 ET (19:45 GMT)
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