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Glencore Dips Below IPO Price On Second Day Of Trading

Tyler Durden's picture




 

And while everyone is focused on the charade dot com resurgence courtesy of the LinkedIn IPO mockery, which is nothing but a VWAP magnet and a tool for Goldman to set a public comp benchmark for its plethora of upcoming "social" IPOs, things are a little uglier for the biggest IPO of 2011. In just its second day of trading, Glencore has already broken its IPO price. Reuters reports: "Shares in commodities trading group Glencore fell below their issue price of 530 pence on Friday, the second day of conditional trading, as investors fretted over its valuation. The world's largest diversified commodities trader
touched a low of 519 pence in unofficial grey market trade before
closing at 524 pence, down 1.1 percent after more than 200 million
shares changed hands, underperfoming a virtually flat FTSE index and a
0.4 percent dip in the broad mining sector.  "Basically, the valuation looks a little bit rich. They worked very hard to get a favourable price and one could argue the only reason it was up yesterday was support from the sponsoring banks," said analyst Nik Stanojevic at Brewin Dolphin. "I think the market feels the same way. It wasn't as if they sold this thing really cheaply with the expectation it would go up 50 percent on the first day."
Fools: they should have just packaged GLEN as a social network for commodity speculators and Glencore would have been the world's largest market cap company already..

From Reuters:

Glencore, the world's largest diversified commodities trader, has said there was strong demand for its stock and it had enough buyers to cover its offering of up to $11 billion within hours of starting the sale process earlier this month.

But many investors have also expressed concern over the outlook for commodities, particularly after this month's sell-off, and fretted over the discounts that should be applied to take account of Glencore's conglomerate structure and of the fact it has operated away from the public eye for 37 years.

"Perhaps the fact that the float has, despite being over four times covered, been met with broad scepticism and sobriety is a sign of underlying health in the metals market?" analysts at Numis said in a morning note.

"The hopes for a 5-10 percent rally remain -- not exactly LinkedIn, but the first objective remains stability and garnering faith in this new currency.

And for all your questions about Glencore and its IPO, the following Reuters interactive feature explains it all.

In other news, we are eagerly expecting the Treasury department to rename Social Security to the Social Security Network Trust Fund and use Goldman to IPO it. Next step: no more SSTF underfunding concerns. Ever.

 

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Fri, 05/20/2011 - 12:31 | 1295823 Astute Investor
Astute Investor's picture

"Basically, the valuation looks a little bit rich.

Therefore, investors are rotating into LNKD.

 

Fri, 05/20/2011 - 12:57 | 1295933 SheepDog-One
SheepDog-One's picture

Trade that 1,500 P/E for a more reasonable 1,200 P/E and sleep better.

Fri, 05/20/2011 - 13:33 | 1296084 Howdan
Howdan's picture

+10,000 (well seeing as we're talking in inflated valuations)

Ahh that comment is hilarious because it's so true....D'ya wanna buy Dow at overvalued? PM's at overvalued? Dotcom hotair stocks like LNKD at way overvalued? Commodity giants with a measly 3% net profit margin like GLEN at way overvalued?

 

No? Oh ok, I've got some US 10yr Ponzi Bonds (ahem I mean Treasury bonds) to sell ya at waaaayyyy overvalued.

 

Markets are bubbling up too much...

Fri, 05/20/2011 - 15:04 | 1296432 Hard1
Hard1's picture

Heard there were loud laughs after the IPO on Glencore's desk, they didn't expect the market to value their coin tossing business so high!!

Fri, 05/20/2011 - 12:31 | 1295825 djsmps
djsmps's picture

Yeah, but yesterday all the news outlets were crowing about how exclusive the IPO was and only the most sophisticated, smartest and richest Europeans could partake of it.

Fri, 05/20/2011 - 12:34 | 1295827 FOC 1183
FOC 1183's picture

"as investors fretted over its valuation"

because, of course, it's so much higher than the "investors" realized the day before they put in bids for allocations.  Which was also before they realized the deal price wouldn't be successfully supported.

Fri, 05/20/2011 - 12:53 | 1295832 firstdivision
firstdivision's picture

Maybe the PD's should have invested the freshly printed $6.9BB into buying more GLEN:L instead of LNKD and ES.

 

Almost GREEN, woohoo!!! Insanity abound.  Must be all those people wanting to buy stocks for tomorrows rapture.  Never know how many FRN's you need to get through the pearly gates.

Fri, 05/20/2011 - 12:33 | 1295842 LawsofPhysics
LawsofPhysics's picture

No surprise, thanks ZH for another short that paid.

Fri, 05/20/2011 - 12:36 | 1295844 falak pema
falak pema's picture

The underwriters must be sweating now...

Fri, 05/20/2011 - 12:37 | 1295855 chancee
chancee's picture

Typical Friday manipulation of SPY at work.  Lay out a couple giant 15 minute candles of up volume to scare away anyone who might be thinking of selling before the weekend.

Fri, 05/20/2011 - 12:45 | 1295875 LRC Fan
LRC Fan's picture

Yep, pretty much fucking standard procedure

Fri, 05/20/2011 - 12:47 | 1295878 mogul rider
mogul rider's picture

I laugh at the way life is today. A fucking web page is worth than 150 million ounces of gold.

You just know this will not end well. Then we'll bail these pricks out and start all over again.

or we choose another option........................

It'll be very interesting to see the smurfs react when the squid needs another bailout form speculating on collaterallized Linkin and Facebook obligations. I relish in the fact that I have moguls throughout my yard made up of metalic substances.

You can't mogul ride on webpages.

To the pumpers I hope your wreckage the last month is complete. To those simple folk just trying to protect their families and survive the Depression - good luck and happy accumulation.

 

Fri, 05/20/2011 - 14:58 | 1296393 Bay of Pigs
Bay of Pigs's picture

Mogul,

I really don't understand why you are so harsh to the gold and silver bulls.

Be nice to see some balance in your reporting of the facts. Pretending that JPM, the COMEX, and CFTC are legitimate makes you look pretty foolish. Please acknowledge who are the real "pumpers" of this sector? It sure as hell isn't the physical PM holders.

http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=127406&sn=Detail&pid=110649

Fri, 05/20/2011 - 13:04 | 1295959 scatterbrains
scatterbrains's picture

whoa! Are terrorists changing directions ?

 

Fri, 05/20/2011 - 13:36 | 1296100 BobPaulson
BobPaulson's picture

Definitely bullish for Apple stocks. Buy.

Fri, 05/20/2011 - 13:38 | 1296097 Use of Weapons
Use of Weapons's picture

Haven't you heard? Apple devotees are included in the rapture.

http://www.tuaw.com/2011/05/17/bbc-loving-apple-looks-like-a-religion-to...

Fri, 05/20/2011 - 12:48 | 1295890 Archimedes
Archimedes's picture

Off Topic..so the European markets close and the US market rockets 72 points higher in 3 minutes? Yeah..that makes sense.

Fri, 05/20/2011 - 12:51 | 1295905 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

You need to realize that the US 'go team' of A is a fascist state. These are how 'markets' act under fascist states.

Fri, 05/20/2011 - 12:56 | 1295922 Sophist Economicus
Sophist Economicus's picture

That and the fact the the Europeans just keep shitting in their pants and put a big order for disposable diapers into P&G, which lifted the DOW...

Fri, 05/20/2011 - 13:03 | 1295943 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

Of course, if americans weren't busy watching dancing with stars and down at Wendys, and actually woke-up to what is happening in their country, they'd be sh*tting their pants too... instead, they just get shat on and take it like some subservient brain-dead dog. At least the Europeans and fellas in the middle east have the balls to protest.

Fri, 05/20/2011 - 13:17 | 1296009 Sophist Economicus
Sophist Economicus's picture

Yes, yes.   That is why Europe went into civil war in 1930 and 40s.  They were upset by their tyrannical rulers threatening to slaughter millions of their innocent civilians, would not accept the idea that they would be put them in camps and murdered, etc.   And then they showed great fortitude in the 1910s when inbred distant cousin  'RULERS' in germany, russia, france, etc played territorial games.  The people of Europe rose to the occasion and deposed them all -- averting the slaughter of 10s of millions of lives....

 

Oh wait - that didn't happen.   These people were actually slaughtered!   OMG!   And the in the 50s and 60s when Soviet tanks rolled in to places like Hungry, it was just allowed to happen.

I hope you enjoy Russian salami, because Vladimir has one he's gonna deliver in your behind.   Me, I'll just laugh from here

Fri, 05/20/2011 - 13:18 | 1296026 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

Unfortunately, given the choice, i'd take my chances with Russia, rather than a tin-pot banana republic like the US 'go team' of A... which is devoid of intelligentsia and bankrupt both financially and morally.

Fri, 05/20/2011 - 13:47 | 1296145 Sophist Economicus
Sophist Economicus's picture

Good!   We finally agree on something.   Enjoy

Fri, 05/20/2011 - 12:52 | 1295911 SheepDog-One
SheepDog-One's picture

1,200 P/E 'looks a little rich'? PUSSIES!!

Fri, 05/20/2011 - 12:53 | 1295913 Sophist Economicus
Sophist Economicus's picture

OT - Gene Simmons from KISS on CNBC -- looks like Col. Gaddafi!!!!!

Fri, 05/20/2011 - 12:50 | 1295914 ebworthen
ebworthen's picture

 

Industrial metals, wheat, corn, oil?

Who needs that physical stuff when there is ether and vapid narcissistic cloud commodities?

 

Fri, 05/20/2011 - 12:54 | 1295916 Cognitive Dissonance
Cognitive Dissonance's picture

Fools: they should have just packaged GLEN as a social network for commodity speculators and Glencore would have been the world's largest market cap company already..

Sounds like a viable business plan to me. I think this is the only way the Fed will off load their balance sheet.

Fri, 05/20/2011 - 12:56 | 1295926 buzzsaw99
buzzsaw99's picture

The fed will buy them!

Fri, 05/20/2011 - 13:08 | 1295967 SDRII
SDRII's picture

marc rich being brought to justice

Fri, 05/20/2011 - 13:28 | 1296053 b_thunder
b_thunder's picture

Blackstone  - the absolute top of the PE bubble

Glencore - the absolute top of the commodidies bubble... at least in the near and intermediate-term

 

 

Fri, 05/20/2011 - 13:34 | 1296091 BobPaulson
BobPaulson's picture

So when do the moths that went to the Linkedin flame get scorched?

Fri, 05/20/2011 - 16:39 | 1296702 GFORCE
GFORCE's picture

Anyone who buys an IPO from a firm that derives its success from identifying market turns--at record highs in commodities--is a moron who deserves the losses they are about to eat.

Sat, 05/21/2011 - 00:17 | 1297567 mcarthur
mcarthur's picture

Glencore's assets do not inspire.  Companies do IPO's for one of two reasons; to cash out or to solve a liquidity crisis.  Glencore is doing it for both reasons.  I don't buy the sell side nonsense of positioning for an Xstrata takeover.  I see a pile of third quartile cost mines that will suffer in a downturn. Trading profits are fleeting so to attach a NAV to this is nonsense.  Financing inventories to keep the ship afloat is costly and they would rather use your money.  The action here clearly demonstrates that the demand for the float was nothing more than vapor.

Sat, 05/21/2011 - 00:57 | 1297640 ivana
ivana's picture

IPO sheep shearing just before market liquidity dries out.

Now with major comodity "player" on market we will see strong volatilites in com mkts (very attractive since everybody thinks fiats are dead) .... to be continued in next episodes of sheep shearing.

Just another bankster utility designed for com mkts

Sat, 05/21/2011 - 01:19 | 1297682 mcarthur
mcarthur's picture

In the early 90s I put the mine plan together for one of Xstrata's assets, the McArthur River zinc mine in Australia.  The financial model clearly showed that this mine would lose money at a fast clip.  But the mine was built anyways and took a 100M writedown a couple years later after I buggered off in 1992.  Xstrata has decided recently to triple the size of the mine in order to prop up money losing smelters in Europe.  So I have issues with these guys and when you look at many of the copper, zinc and thermal coal assets in particular you realize these guys, hence Glencore is very vulnerable.  Selling at the top no doubt.

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