Glencore is a roller coaster, investors just want to ride it

SINGAPORE (Oct 5): Investors really have Glencore’s tail in a spin. Shares of the beleaguered Hong Kong and London listed commodities group this morning surged 71.6% on near seven-fold spike in volume only to plunge nearly 40% from the day’s highs in the final hours of trading to close up just 17% for the entire trading day.  

The Switzerland-based firm that merged with Xstrata was forced to put out a statement to both Hong Kong Stock Exchange and the London Stock Exchange that reiterated that its board was unaware of any reason why there was such hectic activity in its shares. The frenzy in Glencore followed reports that vulture private equity funds, hedge funds and sovereign wealth funds were encircling the embattled group trying to pick up pieces in a fire sale breakup of the firm that has amassed US$30 billion ($42.7 billion) in debts.  

Glencore stock has whipsawed since Hunter Hillcoat, mining sector analyst for Invested Securities in London published a report a week ago arguing that  Glencore's entire equity value could be wiped out if metal prices remain at current levels.