How many stories can one share price graph tell?
The answer, in the case of Glencore (LON:GLEN), is several.
First off, there’s the tale of misery that’s afflicted the mining sector as a whole since gold and copper came off their multi-year highs in the middle of 2011.
It was right into the midst of that maelstrom of fevered optimism that Glencore listed, a time when mining sector hoped it might yet manage to avoid the worst storms of the global financial crisis that were still raging around the world.
It was not to be.
The first trades in Glencore went through at around 525p - one year later they were changing hands at round 300p, down by a third.
They then bobbed around either side of that 300p mark for another couple of years until dropping by a further 50% this summer to a current price of around 140p.
With that decline the Glencore share price graph tells the story of the wider sector, now wheezing and short of breath after growing fat in the boom years.
After all, other companies have fallen equally hard. Anglo American (LON:AAL) has lost more than three quarters of its value since 2011.
Rio’s (LON:RIO) shares have nearly halved.
Barrick’s (TSX:ABX) have dropped by a factor of more than seven.
But the difference is that these other majors are long-standing equity market players. It was noteworthy indeed that Barrick’s recent share price decline plumbed 20 year lows.
Glencore is newer on the block, and till now has enjoyed all the advantages that freshness and youth can bring.
Indeed, the top level of management at Glencore, headed by the redoubtable Ivan Glasenberg, have in recent years been known throughout City mining circles as “the smartest guys in the room.”
Now though, opinion as to their “smartness” is fracturing.
Standard & Poors has revised its outlook on Glencore to negative from stable. Merrill Lynch is concerned that mooted plans to raise equity to reduce debt will not be enough. And investors are asking the company to prepare for a “doomsday scenario”, according to commentary from RFC Ambrian.
But for its part, RFC Ambrian mounts a strong defence of Glencore, and reserves particular ire for commentators in the press who, it argues, are less qualified to comment because they’ve made less money out of commodities over the years than Glencore’s traders.
For RFC, the Glencore boys are clearly still the smartest guys in the room.
Other small brokerages, including Charlie Long at Sanlam and the team at Fairfax are of similar view.
And here we come back to the stories that Glencore’s share price can graph tell us.
Fairfax raises the point that Xstrata, which was absorbed by Glencore in 2012, had a habit of raising capital through deeply discounted rights issues.
For Fairfax, there’s real opportunity in the downward trajectory of the Glencore share price, and not just for short sellers, but for buyers.
However low the price goes, the thinking goes, if there is a rights issue there will be a further discount and investors will be able to pick up more shares even more cheaply.
Glencore has moved against the shorts in recent days with its plans to reduce copper production and statement of intent to cut debt by US$2.5bn.
According to Fairfax, the 400,000 tonnes per year reduction in copper production could swing the copper market back into deficit.
And that in itself might be enough to reverse the fortunes of Glencore’s shares.
Because another story told by the Glencore share price graph is of the recent collapse in copper caused, it’s thought, by Chinese shorting and de-stocking.
Analysts at Deutsche Bank were cautious about over-stating the effects of Glencore’s move. But there’s no doubt it was significant.
First off, they said, it ensures that nothing of the order of what happened in coal or iron ore is now going to happen in copper.
That in itself is a mark of Glencore’s power. Whether the output cut will actually lead to higher prices remains moot.
But confidence, like panic, can be infectious. If Glencore can swing the market back into deficit, sentiment may yet turn again. And that in turn could deliver significant upward trajectory in the share price graph.
At which point the market chatter once again will be all about “the smartest guys in the room.”