Harris bets on FTSE 100’s worst performer this year

GLENCORE investor Harris Associates, one of the biggest shareholders in the commodity trading and mining company, is betting that this year’s worst performer on the UK’s benchmark stock index will recover.

Harris increased its stake to 4.5 percent by buying shares in the past 30 days as Glencore tumbled, said David Herro, Harris’ chief investment officer for international stocks.

Harris is now Glencore’s fourth-largest shareholder with a stake worth about $1.6 billion (R20.5bn) based on Monday’s closing price. It owned about 1 percent of the company on June 30, according to public filings, and has not previously disclosed its increased holding.

“We like their copper position, we like their trading position,” said Herro, who manages the $29bn Oakmark International Fund. “Their other metals don’t seem to be anywhere near as impaired as iron ore. They are well positioned.”

Glencore, which has lost 43 percent this year as commodities slumped to a 13-year low, gained for the first time in six days yesterday, rising as much as 2 percent.

“It’s one of the only stocks that’s up today so maybe the market generally has taken the view the stock is near a bottom,” said Deutsche Bank analyst Rob Clifford yesterday.

The Telegraph on Saturday described Herro as an activist investor building a stake to pressure billionaire chief executive Ivan Glasenberg.

Herro denied this. “We have not invested in Glencore as activist shareholders, we’ve made this investment as longterm value investors,” he said.

“The business at this price is substantially undervalued. We are a long-only value shop.”

Commodity prices have retreated as China’s economy expands at the slowest pace in a quarter of a century. – Bloomberg