Glencore share price: Harris Associates deny activist intentions with buy-in

Fund upped stake in pursuit of long-term value, manager says

Glencore share price: Harris Associates deny activist intentions with buy-in

Chicago-based investment fund Harris Associates recently upped its stake in Swiss commodities trading house and diversified mining giant Glencore Plc (LON:GLEN) to 4.5 percent (up from a reported figure of 1.06 percent), a senior manager at the fund said in an interview for Bloomberg yesterday.

David Herro, chief investment officer for international stocks at Harris, refuted speculation that the fund had intentions to advocate for strategic change in Glencore, noting that the miner is ‘well-positioned’.

“We like their copper position, we like their trading position. We have not invested in this as activist shareholders, we’ve made this investment as long-term value investors,” Herro said, as quoted by Bloomberg. “The business at this price is substantially undervalued. We are a long-only value shop.”

With respect to Harris’ history of prompting serious change at a number of global corporations, analysts had seen the fund’s buy-in as a challenge to Ivan Glasenberg, Glencore’s billionaire chief executive.

A spokesman for Baar, Switzerland-based Glencore declined to comment.

Glencore’s share price had surged 1.40 percent to 172.39p as of 13:07 BST today, as compared with a 0.6 percent loss for the FTSE 100. However, earlier in the session, the company’s stock dropped to a fresh all-time low of 168.80p. The firm’s stock has depreciated more than 67 percent since flotation in 2011.

Further investor activity is likely tomorrow, as the company is due to report first half results. Analysts are projecting that H1 net income will come in at $848 million (£543 million), down from $2.27 billion for the second half of last year.

Traders will be looking closely at the performance of Glencore’s vast trading division, which is expected to partially pare the significant downturn in mining profits.

Rio Tinto and Anglo American, two of Glencore’s top mining rivals, recently reported that their H1 profits had slid 43 and 36 percent, respectively.

As of 15:32 BST, Tuesday, 18 August, Glencore Xstrata PLC share price is 172.07p.

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