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..
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.