Except for our April 4th post "Will Glencore be the Blackstone IPO of the Commodity Rally?" wherein I said:
So I am going to entertain the idea that I am wrong, that the Glencore IPO doesn't mark the top in equities.I've spent most of our pixels the last six months babbling about the possible equity implications.
It marks the top in commodities....
Here's FT Alphaville:
There was a really interesting column penned by Matthew Lynn on Tuesday.I would take issue with Mr. Glasenberg's comment "...We are only potentially selling out in five years’ time...".
In a nutshell it argued that investors should be mindful of investing in a company known for its shrewdness when it comes to market-timing.
As he noted:
The main concern about Glencore isn’t the state of the commodities business. It is about timing. The record shows that when trading businesses come to the market, investors usually get outfoxed. Take Goldman Sachs, for example. No one disputes that it is a great bank. But if you bought shares in its IPO in May 1999 and sold in November 2008 you would have lost money, though there would have been better selling opportunities along the way.But here’s the thing. Are Glencore traders really all that good at calling time on commodity bull markets?...MORE
“Is it the top of the cycle?” Chief Executive Officer Ivan Glasenberg said in an interview with Bloomberg reporter Jesse Riseborough last week. “Who knows, who cares? We are only potentially selling out in five years’ time, so let’s worry about the market in five years’ time.”
It doesn’t make any difference. They will still choose a point that looks like a peak in the market to sell. They can’t help themselves: cashing in at the top is in their blood.
Once they get the behemoth trading there are a few ways to either hedge or do a synthetic sale.
And Mr. G.'s people know all of them.
When I saw that quote I almost flagged it as a Mandy Rice-Davies moment but because of space constraints decided to leave gentle reader with: