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Bill Nygren Comments on Glencore PLC

Glencore PLC ( GLEN-LON - $5)

Glencore ( LSE:GLEN ) was formed 40 years ago as a physical commodities trader, and over the years Glencore's value-focused management team has grown the company into one of the largest miners in the world. After decades of being run as a private company, Glencore went public in May 2011 at a price of $8.57. Like many companies in the mining sector, Glencore's share price has fallen over the past few years as commodity prices have weakened due to a glut of new supply. We believe the market has overly discounted the effects of lower commodity prices and has provided us with an opportunity to buy Glencore at a compelling discount to value. After giving the company credit for the expected ramp-up in production from large current investments, the company is trading at less than 9 times earnings - too low considering that approximately a quarter of those earnings come from the very high-return trading segment and the rest come from long-lived and well-run mining assets. Couple this low valuation with Glencore's smart and highly incentivized management team (the senior leaders own billions of dollars of stock and many only receive nominal salaries), and we find Glencore to be an attractive addition to the Fund.

From Bill Nygren ( Trades , Portfolio)'s Oakmark Fund - Third Quarter 2014 Letter.About GuruFocus: GuruFocus.com tracks the stocks picks and portfolio holdings of the world's best investors. This value investing site offers stock screeners and valuation tools. And publishes daily articles tracking the latest moves of the world's best investors. GuruFocus also provides promising stock ideas in 3 monthly newsletters sent to Premium Members .

This article first appeared on GuruFocus .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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