Activist investor buys into 43% price tumble, ups Glencore stake to $1.6bn

(Bloomberg) – Glencore Plc investor Harris Associates LP, one of the biggest shareholders in the commodity trader and miner, is betting this year's worst performer on the U.K.'s benchmark stock index will recover.

Harris increased its stake in Glencore to 4.5 percent by buying shares in the past 30 days as the stock tumbled, said David Herro, chief investment officer for international stocks. Harris is now Glencore's fourth-largest shareholder with the stake worth about $1.6 billion based on Monday's closing price. It owned about 1 percent of the company as of June 30, according to public filings, and hasn't previously disclosed its increased holding.

"We like their copper position, we like their trading position," Herro, who manages the $29 billion Oakmark International Fund, said in a phone interview. "Their other metals don't seem to be anywhere near as impaired as iron ore. They are well positioned."

Glencore tumbled 43 percent this year as commodity prices slumped to a 13-year low. U.K. newspaper The Telegraph over the weekend described Herro as an activist investor building a stake to pressure billionaire Chief Executive Officer Ivan Glasenberg.

"We have not invested in this as activist shareholders, we've made this investment as long-term value investors," Herro said. "The business at this price is substantially undervalued. We are a long-only value shop."

Commodity prices have retreated as China's economy expands at the slowest pace in a quarter of a century. The Asian country is the biggest consumer of raw materials. Iron ore delivered to China has dropped 20 percent this year.

Glencore fell 1.7 percent to 170 pence in London, giving the company a market value of about $35 billion. The shares have fallen to the lowest since they began trading in 2011, when the company sold stock at 530 pence each. It is this year's worst performer on the FTSE 100 index.