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The biggest impediment to any plans by Glencore International PLC, St. Helier (OTCMKTS:GLNCY) to expand its asset sale plan after the recent record share decline may be its expectations. As per Pengana Capital Ltd. and CRU Group, even some of the assets in the company’s portfolio, the South American copper and the Australian coal mines that so far are not for sale, would be not in the reach of prospective buyers.

The expectations gap

CRU consultant Matthew Boyle said that the company probably wouldn’t receive a fair bid for the Australian coal business, even if it was willing to sell them. Although coal prices are weakening, the mines are comparatively cheap to operate and some could stay profitable. There would remain a large gap between the assets value and bid of any potential buyer. Glencore, if they intend to sale any assets, would consider selling non-performing or non-core assets.

The momentum

The stock price of Glencore have continued to decline, eroding over three quarters of its value since March 2015, even after the company scrapped its dividend, pledged to sell assets and raised $2.5 billion funds in a share sale. The Baar suggested that both copper and coal were among its assets with promising outlooks when it reported its debt reduction plan and asset sale on September 7.

The big challenge

Glencore reported a debt-cutting plan in September in an attempt to minimize its borrowings to $20 billion from initial figure of $30 billion. The company engaged Credit Suisse Group AG and Citigroup Inc. to sell a minority holding in its agricultural business. This respective segment is valued around $10.5 billion. The decline in raw material prices may deter buyers from finalizing any deal in short-term. Clearly, the trouble with divesting assets in this economic scenario is the huge chasm between sellers and buyers.

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Glencore International PLC, St. Helier (OTCMKTS:GLNCY) had crashed at the end of the last week with a large gap but the rise in the following 3 sessions managed to fill up the gap almost entirely. The stock reached the upper end of the gap and that may force a short term correction in the next couple of sessions. The stock has been in a huge bear market for the last few months, as evident from the chart attached and the last phase of the decline has been contained in a perfect channel. Unless that channel is broken on the upside, the downside remains open.

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Steve Kanaval: Portfolio Manager/Writer/ Market Analyst Steve began his career in the Trading Pits in Chicago making markets at the Chicago Mercantile Exchange (NYSE:CME) the Chicago Board of Trade and the CBOE in the early 80’s. He ran the Morgan Stanley Derivative Prop Trading for the firm specializing in Index Arbitrage. He continued his career as a Trader/Portfolio Manager for multiple Hedge Funds during the Internet Boom of the 90’s managing large portfolios. Steve is known as an expert in MicroCap Technology Stocks and the emerging Digital Currency markets as a Portfolio Manager for his Family Office. Steve has managed portfolio’s in volatile asset classes for 3 decades as a commodity trader, hedge fund manager and digital currency trader and miner. Steve publishes his views on the asset classes in a public forum and has published more than 10,000 articles simplifying these complex and volatile assets for readers. His work is published on multiple sites including Bloomberg, Equities.com, Hacked.com, CryptoCurrencyNews as a paid contributor. His work includes research, journalism and archived video on important market volatility related to stocks, digital currency and other volatile misunderstood asset classes. He offers a humorous, unique insight and the related back stories and drivers for readers interested in volatility and emerging market assets. Full disclosure Steve is long 25 digital currencies and sits on the board of multiple public companies involved in digital currencies, and owns shares in these companies from time to time.

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