It’s been a long wait, but those who bought shares in commodities giant Glencore PLC (LSE:GLEN) when it listed back in May 2011 are finally in the money.
Yes, it took all of ten years and 11 months for Glencore actually to put its shareholders in the black, and it took one of the most extraordinary commodity markets of all time and not one (Covid) but two (war in Ukraine) black swan events to do it.
If investors had known any of that back in the spring of 2011, would they even have considered investing in Glencore?
Of course not. Consider, for example, alternatives in the tech sector, like Amazon or Tesla, which are both up many thousands of percentage points over the same period. Or, for the more cautious-minded, the FTSE 100 index as a whole, up by around 25% over the same period.
And for the really cynical, consider peers like Rio Tinto and BHP. Rio’s up by something shy of 50% over the same ten year period, while BHP is up by a more modest 30% or so.
Does that make Glencore the worst performing of the major mining companies over time?
It depends on your perspective, of course.
Glencore marketed itself back in 2011 with a famously double-edged phrase.
The company was run, so the City talk had it, by “the smartest guys in the room.”
That was a reason to buy.
Or was it?
The smartest guys in the room were also the very same guys who were selling big chunks of their own equity. They may have been smart, but they were on the sell side of the equation. What exactly you were buying was open to question – a recently hybridised combination of a major trading house and a large mining company, built up to significant scale on the back of a mining boom that had ended three years previously but was just at that minute enjoying a mini-resurgence.
The smartest guys in the room locked up every broker in town on retainers or the prospect of large-scale aftermarket business, and sold heavily at a very high price. They came out on top.
Because, of course, if you factor in inflation and dealing fees, then those original investors in Glencore are still underwater.
But on the plus side, they’re probably just one more black swan event away from breaking even.