Charlie Aitken is angry, from The Australian:
“WHAT the f. .k is wrong with these morons?” That’s the question Bell Potter’s head of institutional equities, Angus Aitken, is asking about Rio Tinto management — particularly CEO Sam Walsh — in a note to clients that is an early contender for rant of the year.
Aitken is upset that Rio is using its position as the lowest cost producer of iron ore sold to the key Chinese market to pump out oodles of the stuff, keeping prices depressed. He reckons Rio should “tone down the production and the price will rise” — along with Rio’s share price. “It just makes no sense whatsoever and is all about a case of big dick syndrome not profitability,” Aitken said in the note, sent on Tuesday night.
Aitken went on to call Rio management “arrogant twats” who don’t get “schoolboy economics” and predict that Glencore Xstrata boss Ivan Glasenberg “will be back” for another takeover bid.
He threatened to hire a plane towing the message “Ivan please come back” and fly it past the Rio results presentation in February in the hope “Sam looks up from his milk jugs” — a reference to Walsh’s love of collecting crockery. All that and Aitken still reckons Rio stock is a buy. You’d hate to see what he says about management at companies he rates as sell.
Dearie me. Ivan isn’t coming back. Why would RIO’s key shareholder, China’s Chinalco representing China inc, want him to? And even if he did, he wouldn’t do as he’s threatening and rationalise supply. That’s a trick to win over naive shareholders. He’d continue to ramp up supply and destroy his competitors.
Why? Because apart from very brief glowing periods of demand shocks, in the commodity business the lowest marginal cost of production wins and that’s all there is to it.
