 Good day fellow investor. Glanko is a very interesting stock offering a 10% shareholder yield 5% from the dividend and 5% from the buybacks as over the last year and the previous year they have created a strong cash flow strong cash flow from the operations low cost operations that allows them to really give 5 billion back to shareholders on a 50 billion market cap that is 10% dividend shareholder buyback yield however you want to call it. When you put that into the big picture of similar companies diversified metal miners we can call them. Glanko is the cheapest of them all. So let's discuss the company its past its earnings report the risks the last conference call that happened a few days ago and it will give you a good overview on what to expect how to put Glanko in your portfolio and whether to put it of course and what is the investment return you can expect. Glanko is another diversified miner like tech or anglo-american that i just researched but the cheapest one in this case especially if we look at the commodities cycle it mines copper cobalt zinc lead nickel coal a lot of coal so copper coal are the key commodities that Glanko mines plus it has a trading food trading commodity trading business that gives it huge revenues but with smaller margins margins that are consequently however stable unlike anglo-american Glanko's expectation is to grow production over the next years by approximately 20% on a cost basis also Glanko's margin margins look very healthy copper costs below one dollar per pound on a price of two three dollars so even a recession whatever happens would not destabilize Glanko as in it in the past but that's a different story we will touch more on that later growth also implies higher capital expenditures when where Glanko plans to spend about five 4.9 billion over 2019 and in the future per year given the ebtdi of 15 billion that they expect there is plenty for capital sustaining capex for investment capex for returning to shareholders and paying down that the company expects cash flows of 6.8 billion if copper prices remained at spot prices which is a strong cash flow and a yield even higher than 10% on the current market capitalization their investment case is that they are exposed to all the metals that are important for the future zinc copper still coal even if they will not increase production but they will try to gain on their low production cost and they have high yield and if in case copper prices go up zinc prices go up their cash flows might even go up to 10 15 billion through the cycle of those commodities while the downside is relatively limited 10 billion on a 50 billion market cap is a 20% free cash flow yield which is very very high and these three cash flows are paid taxes paid interest rates paid sustainable capex so really free cash flows they estimate we are now in the mid cycle price range and they use 2018 as an average year in a super cycle their cash flows would be 14 billion in the deepness of a recession probably just 34 billion so that's the cycle you have to estimate and include in your calculations and expectations when you include this in the portfolio 7.5 billion was their expected average in the previous expectations which is nice high cash flow yield double digit cash flow yield if you invest in it now now but only once in the last 10 years did glancor managed to achieve such a high level okay they have changed a lot in the past and let's talk about glancor's past as others they were extremely leveraged a few years ago invested hugely in commodities and they were also projected to go bankrupt in 2015 when they had to divest assets so they lowered their net funding they lowered extremely their net debt divested all those crazy assets that they were investing in and now everything looks much much different much much better and the market might not trust them yet as they have a low valuation compared to others capital expenditure as you can see has been reduced in comparison to what was the case in 2014 when there was a craze among all miners and they are preparing for lower prices with then adjusted cash flows but not negative cash flows which gives a margin of safety and they delivered on their targeting of lower net funding lower net debt lower debts to ebtdi which is very very interesting and even if in the low prices of january 2016 they still expected free cash flows to be above 3 billion and i don't expect the 2016 january prices in commodities to replicate themselves unless we have a deep recession and then that would be only for a short period of time so 3 billion is the lowest cash flows that you can expect and then up to 10 15 billion in a super cycle and the company the ceo is saying that they will focus on returning cash flows to shareholders because that's the smartest thing to do now and not doing mergers and acquisitions because they don't see many opportunities which is something very important just to go back to the crazy environment that was going on five years ago this is a nice chart from bhp that explains where the industry went wrong as it invested in the wrong time in the wrong assets you can see the middle chart it shows the capital and exploration expenditure and componenty basket index for bhp so as commodity prices went up they really plowed the money back into the cycle as the commodities went down they retreated from those investments as a smart savvy commodity investor you have to do the opposite you have to invest when nobody's investing then you take advantage of the cycle and try to disinvest protect yourself not invest when the commodity prices are high but many of them and hopefully glancor have learned their lesson however glancor is a big company dealing all around the world we have to discuss the risks and the issues there is a subpoena from the department of justice received from glancor in 2018 to produce documents and other records with respect to compliance with the foreign corrupt practices act and united states money laundering status so the requested documents relate to the glancor core group business in Nigeria the democratic republic of Congo and Venezuela from 2007 to present so that's something that hangs above the company we don't know what will be the cost it might really shake glancor or it might turn out to be nothing shares fell 14 when that was public publicized in 2018 there have always been controversies with glancor and one has to keep them in mind from what i said about corruption dealing with Congo and all the other countries when you employ 140 000 people there will always be accidents fatalities so we have to keep in mind that there are always five to ten fatalities with glancor they are mining into the democratic republic of Congo there has been a new tax law there so they have increased taxes on glancor out of the blue which increases their costs there are premium profit taxes of things like that they are trying to discuss with the government but that's usually very difficult and those are not really premium mining jurisdictions but that might be the reason why glancor is cheaper however it has a lot of mines across a lot all over the world which means it's also diversified so you will hear the news but you have to calculate how big are those news mergers and acquisitions in the q3 2018 conference called the ceo said that they are there aren't many acquisition opportunities for a 15 investment internal return on investment and that's then it's better to return money to shareholders also he reiterated that into the last conference call he says that they are going to pay dividends do buybacks and give a 10% yield to shareholders cold businesses declining might be another issue but okay they have a low cost price there are not a lot of investment so it might be profitable even if declining the focus of the conference called they discussed a lot of technical things with the analyst but the focus was that they distributed 5.2 billion to shareholders 2018 3 billion in dividends and 2 billion buybacks Swiss investors have to see what are the benefits there because they might not be taxed on the swiss withholding tax that high there the ceo says that they should be doing the same going forward expecting cash returns between 4.8 billion and 5.8 billion 2019 as I quote there is not much much to do with the cash other than doing these buybacks or distributing dividends so diversified miner with assets all around the world there is always something going on 10% yield for shares shareholders estimate how that fits your portfolio I am putting Glencore on my watch list I'm already exposed to copper to zinc and hopefully perhaps I will dip into this depending on how the other investments work out but I'm not going to buy that immediately now putting out a watch list learning about the company and then see how it goes you cannot own everything immediately if there is a dip during the year I might dip my toes into this too but I want to see also about the subpoena and the risks and learn a little bit more about the skeletons in the closet thank you for watching looking forward to comments and I'll probably see you in the next video