Founded in 1974, Glencore plc is a leading global producer and marketer of commodities. The company is headquartered in Baar, Switzerland, but it has main offices in London, UK; Rotterdam, Netherlands; and St. Helier, Jersey. The company was founded as Marc Rich and Co., but it later acquired the name ‘Glencore’ when it was bought out in 1994. The name was an acronym for ‘Global Energy Commodities Resources’.
A true powerhouse in the world of commodities, Glencore operates in three business segments: Precious Metals, Metals and Minerals, Energy Products and Agricultural Products. The company is a major global player in the production and marketing of copper, cobalt, nickel, zinc, lead, coal, oil, and several other metals and minerals.
Glencore is also a leader in the niche of commodities trading – transporting, storing, processing, and delivering them to customers all around the world. The company has positioned itself as a global diversified natural resources company, and it boasts strategic assets all around the world, such as processing plants, ships, warehouses as well as storage and port facilities.
Commodity trading companies depend on important data from producers, but Glencore is practically both a producer and marketer, enjoying a unique edge over competitors.
Glencore plc has always been an opportunistic dealmaker, making strategic acquisitions of assets and companies all over the world. Its most important deal to date, though is the 2013 merger with Xstrata in a deal worth over $30 billion.
Glencore has a dual listing on the London Stock Exchange, where it trades under the ticker symbol GLEN, and on the Johannesburg Stock Exchange, where it trades under the ticker GLN.
Commodities are essential for human living, but is the Glencore stock essential in your portfolio?
Glencore stock is quoted in GBX (British Pence) rather than in pounds. GLEN was floated in May 2011 with an IPO price of 530p. The company has never implemented any stock splits in its history.
It is fair to say that GLEN stock has never really enjoyed its time in the ‘public’. The IPO price remains, to date, the stock’s all-time high, with the company having to deal with a myriad of business challenges ever since it went public. Immediately after going public, GLEN stock started drifting lower, hitting a temporary low below 350p by August 2011. It then attempted a feeble recovery that only managed to peak above 480p by February 2012. It then proceeded to oscillate between 250p and 400p for a few months before enduring a forgettable year in 2015.
From a starting price of circa 300p in 2015, GLEN tumbled to lows of circa 70p by January 2016. The crash was triggered by a combination of factors, such as tumbling commodity prices, the strengthening of the US dollar, huge debt issues, Chinese growth concerns, and a management scandal.
But fundamentals turned positive for the company – commodity prices started rising, the global economy improved, and the company made major corporate changes. This inspired a rally from the 70p area to a peak above 400p by January 2018. After this peak, the stock started edging lower again, reaching a trough at circa 120p by March 2020.
Another rally ensued that saw the stock break and settle above the 300p barrier in 2021.
Glencore plc is a willing dividend payer, but the company has periodically suspended and reinstated payouts depending on its prevailing business conditions.
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