I came across two interesting articles yesterday. One stated that SocGen – a French Investment bank – was shuttering its commodities business (Bloomberg). I thought that it was interesting for them to be “selling” at the bottom of the commodities cycle.Then I came across a second article about Billionaire Leon Black at Apollo – buying a commodities business (Arconic – ARNC) for $10 Billion (Reuters). Same facts in the marketplace – different vision. One sees difficulty in the opportunity, the other sees opportunity in the difficulty.
SocGen’s business decision reminds me a lot of GE – which sold their financial services businesses at the bottom in 2008-2011 and bought an energy business at the top in 2014 (Baker Hughes).
While it’s easy to be an armchair quarterback, taking a long term perspective can give clues and patterns that most primary school children would be able to point out with a crayon. Who’s the smart money and what opportunities do you see looking forward?
