- Harris Associates now owns 8.5% of Swiss trader, Herro Says
- Glencore shares have surged 46% this year as debt plan unfolds
Investor David Herro has bought more Glencore Plc shares and now owns a bigger stake in the Swiss commodity trader-cum-miner than its billionaire Chief Executive Officer Ivan Glasenberg.
The “bear story was way, way overblown and as a result we have the company rising from the abyss,” Herro said in an interview on Monday. “We still think the company has significant upside from here.”
Harris Associates LP now owns just over 8.5 percent of Glencore after buying in recent weeks, said Herro, chief investment officer of the Chicago-based firm. That’s up from the 7.1 percent Herro said he controlled in January and compares with Glasenberg’s 8.4 percent holding.
A spokesman for Glencore declined to comment.
Glasenberg, a South African accountant turned coal trader, has worked at Glencore for over 30 years and was the biggest shareholder at the time of its $10 billion initial public offering almost five years ago. He was usurped in 2013 by Qatar’s sovereign wealth fund following the $29 billion all-share takeover of Xstrata Plc, where Qatar Investment Authority was the second-biggest investor.
Glencore’s shares have rebounded 46 percent this year as the company rolls out a debt reduction plan designed to appease investor concerns that its borrowings were too high. The stock plunged 70 percent last year amid a rout in commodities, forcing the company to scrap its dividend, sell new shares and offload assets.
“We still believe the company is significantly undervalued,” said Herro, who manages the $24 billion Oakmark International Fund at Harris. “Our in-house valuation of Glencore is still a multiple of what it’s trading at today.”
The stock rose 12 percent in London trading on Monday to close at 132.4 pence. That’s the highest close since the company sold $2.5 billion of shares at 125 pence apiece to investors including Herro and CEO Glasenberg on Sept. 16.
At Monday’s closing price, a holding of 8.5 percent of Glencore is valued at $2.3 billion.
Qatar participated in the share sale last year, buying 8.9 percent of the stock on offer to maintain its position as the group’s largest investor, people familiar with the matter said in October.
Harris first declared a small position in Glencore in September 2014. The fund reported the biggest increase in its holding between the second and third quarter of last year. It most recent regulatory filing in the U.K. reported a 5.1 percent holding on Sept. 21.
Peter Grauer, the chairman of Bloomberg LP, is a senior independent non-executive director at Glencore.