David Herro (Trades, Portfolio) managed the Oakmark International Fund (OAKIX, Financial) since 1992, the Oakmark International Small Cap Fund (OAKEX, Financial) since 1995 and the Oakmark Global Select Fund (OAKWX, Financial) since 2006. He has won Morningstar's International Stock Fund Manager of the Year in 2006 and International Stock Fund Manager of the Decade for 2000-09. On Bloomberg on Aug. 28, he touted Glencore (LSE:GLEN, Financial) as extremely attractive at these prices.
I took a closer look at the firm and there’s much to like.
Glencore is a top commodities traders. Activities range across the spectrum from metals, minerals, energy to agricultural commodities. Glencore offers marketing and financing services to commodity producers, but it is also one of the major producers of commodities itself. Its portfolio is focused on coal, copper, zinc and nickel.
Less sensitive to commodity prices
Glencore is less vulnerable compared to commodity peers, as its marketing business isn’t dependent on the direction of commodity prices. Marketing and financing services need to happen almost regardless of commodity demand. That said, if demand crashes, Glencore will be hurt even in its trading/financing business.
Owner/operator
Glencore has been headed by Ivan Glasenberg since 2002. Glasenberg has a history of creating value for the firm’s shareholders. He’s a large shareholder himself, and Glencore’s value represents a good deal of his net worth.
Strong balance sheet
Glencore deleveraged its balance sheet after the 2015 downturn in commodities.
The company is focused on returning cash to shareholders. This is something of an industry trend and is important because as big players are refraining from spending big on capex, prices of commodities have a chance to remain high in the absence of oversupply.
Disclosure: No position.
