This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Glencore: The Next Goldman Sachs

Goldman Sachs executives made similar statements in explaining the rationale for that firm's historic IPO in 1999, according to William Cohan, a former investment banker at JPMorgan Chase (JPM - Get Report) and Lazard (LAZ) whose book, "Money and Power: How Goldman Sachs Came to Rule the World" was published this week.

"Everybody always says that, and sometimes it means a bunch of nothing," Cohan says. He says Goldman had lots of reasons to go public, though most of them relate to the importance of having "cheap money."

One reason is competition. Goldman competitors like Morgan Stanley (MS - Get Report), Bear Stearns and Lehman Brothers had already gone public, giving them access to that cheap money. That creates a greater opportunity for investments, acquisitions, and, yes--cashing out.

"For Glencore, I'm sure the principals don't need the money, but having easy access to other people's money is hugely important and by the way, why not?" Cohan says, noting that the recovery in stock and commodities prices provides the first opportunity for a public offering in some time.

Indeed, the impending deal is fuelling talk of a bubble, as many speculate the savvy minds who run Glencore want to get out before the market falls.

Goldman Sachs helped add fuel to such speculation Tuesday when a report by commodities strategist Jeffrey Currie advised investors to sell a basket of commodities-linked securities, suggesting "headwinds" for copper and platinum, as well as signals oil currently offers more potential risk than reward for investors.

Nonetheless, Goldman still sees "upside potential" for commodities over the next 12 months and many others who depend on the market for a living remain optimistic the run will continue.

"While bullish investor sentiment is required for an IPO such as Glencore, that in and of itself is not a signal of a coming decline," says George Stein managing director of New York-based Commodity Talent LLC, a global recruiting firm focused on commodities.

Stein says there have been "scattered cutbacks" at commodities divisions of Wall Street banks due to new restrictions on proprietary trading and investing but that "risk demand" remains among the firm's clients in power trading, agricultural commodities, metals and "standbys" like oil trading.

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
C $52.42 0.00%
CS $24.34 0.00%
GS $189.79 0.00%
JPM $61.28 0.00%
MS $35.79 0.00%

Markets

DOW 18,132.70 -81.72 -0.45%
S&P 500 2,104.50 -6.24 -0.30%
NASDAQ 4,963.5270 -24.3630 -0.49%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs