Not just glencore who fecked up in the last super cycle21 Mar 2021 20:20
The Times ..It is telling that Anglo American’s chief executive Mark Cutifani recently stated that the mining group will take a measured line on investments, despite recent hype over a new commodity supercycles.
As well he might. One of the abiding memories of the last period of record prices was the profligacy of executives from some of the world’s largest resource companies.
Perhaps the most infamous deal was attributable to Tom Albanese, the then newly appointed chief executive of Rio Tinto, who decided to mark his elevation to the top job in 2007, by snapping up Alcan, a Canadian aluminium manufacturer, for around $38bn (£27.3bn) — at the time, the world’s largest ever mining deal. Rio effectively created a new — though unsustainable — top in the market, and was eventually forced to writedown roughly two-thirds of the original purchase price.
Cutifani is clearly not interested in going down that road, even though demand prospects for Anglo’s copper, platinum and diamonds are wholly encouraging. So it is doubtful that we will see a repeat of the imprudent kind of dealmaking and one-upmanship which sapped strength from the miners’ balance sheets, thereby imperilling their ability to return capital to shareholders.
Yet with all the talk over the coming supercycles, now might be a good time to offload some of your resource holdings. Two of Anglo’s insiders Didier Charreton and Bruce Cleaver — the latter the chief executive of the DeBeers subsidiary — did just that, collectively hiving-off around £3.3m worth of shares following publication of the mining heavyweight full-year figures for 2020. With a potential sizeable increase in production volumes over the next three to five years, we think Anglo is well positioned as anyone to exploit positive pricing trends.
Concerns surrounding how many companies will make a permanent shift to home- or hybrid-working post-pandemic has caused shares in London-listed office landlords to trade at sizeable discounts to net asset value. For CLS, that gap stands at 27 per cent versus NAV at the end of December.
That market valuation can either be viewed as a value opportunity or an apt foreshadowing of falling occupancy. CLS’s management has placed itself in the former camp, with chief executive Fredrik Widlund and chief financial officer Andrew Kirkman purchasing a combined £152,000 in shares in the group.
The executives could have good reason for their apparent confidence. Estimated rental values have grown across the UK, France and Germany. The latter continued to lead the way, generating a 3.1 per cent increase. An increase in the portfolio valuation and a robust rent collection rate of 99 per cent, also meant the EPRA net tangible asset value rose by almost 6 per cent, ahead of forecasts from some analysts.
However, potential occupiers have been circumspect around the economic outlook, which caused a rise in the vacancy rate to 5.3 per cent at end of December, up from 4 per cent the
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