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Glencore’s earnings crash shows its savvy founders sold stock to the public at the right time (for them)

Naomi Rovnick

Commodities giant Glencore is well known for its trading savvy. And a common point analysts raised just before its 2011 IPO was that Glencore’s majority shareholders may be selling out because they predicted the world resources “supercycle,” as commodities bulls used to call it, was about to be punctured.

Glencore’s 2o12 earnings, released today, will have its IPO cynics chuckling at the prescience of their foresight. Last year, Glencore’s net income crashed 75%. That was partly because of a decline in the value of Glencore’s stake in Russian aluminum producer Rusal, but generally because its sales prices declined as China’s growth slowed.

While the London and Hong Kong flotation made billionaires of Glencore’s bosses, it’s not at all provable that CEO Ivan Glasenberg saw into the future with mystic accuracy before selling part of his company to outsiders. Maybe he just wanted to spread the fruits of his company’s success more widely and was as surprised by the supercycle accident as many others in the resources industry (paywall). Still, the IPO timing looks brilliant for those who swapped large stakes in the business for cash.

Here is what has happened to Glencore’s London share price (blue line) since its stockmarket debut and with the overall performance of the FTSE 100 (yellow line) provided for reference. Ouch.

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