Is is worth buying shares inAnglo American? Your options explained

When the Australian mining group BHP tried to buy its London-listed rival Anglo American for £39 billion this year, the proposal was condemned by the Anglo board as “highly complex and unattractive”.
But it was enough for shareholders to ramp up pressure on Anglo American, the FTSE 100 name, to simplify its sprawling business. So how much value is being unlocked at the 107-year-old miner?
Anglo is restructuring fast. This week it announced it had offloaded its 33 per stake in Jellinbah Group, a joint venture that owns a 70 per cent interest in steelmaking coal mines in Queensland.
The miner’s interests are spread across multiple commodities, including iron ore, steelmaking coal, copper and nickel, plus a significant business in platinum group metals such as palladium and rhodium, as well as its diamond business, De Beers. Shareholders have argued that Anglo’s investment case can be much stronger if it simplifies this structure to create a miner with a 60 per cent exposure to copper. Its copper mines in Peru and Chile are together capable of producing around 760,000 tonnes each year.
A focus on copper should serve it well in the long term, given growing structural demand for the metal in manufacturing processes. It is integral to building technologies needed for the transition to a low-carbon economy, including electric cars, wind turbines and energy networks.
Anglo’s recent trading has been solid: in its most recent third quarter update it reported that its Chilean copper production is on track to meet its guidance for the full year, falling 13 per cent as expected due to the planned closure of the Los Bronces plant. Meanwhile production in Peru is expected to grow in the fourth quarter as the grade of the metal and recovery rates improve. The company said it expected to announce a steelmaking coal sale in the coming months, while the Anglo American platinum (“Amplats”) demerger is also on track and expected to complete by the middle of 2025.
This column last rated Anglo American a buy in mid-December last year, citing the possibility of takeover interest and the potential for the shares re-rating if it simplified or broke itself up. Since then the stock has returned an impressive 52 per cent, comfortably beating the FTSE 100 at just 12 per cent, and well ahead of other major London miners such as Rio Tinto and Glencore, which have delivered a return of 12 per cent and negative 2 per cent respectively.
Anglo no longer looks like the value opportunity it was 12 months ago, when the shares traded at just above £17 compared with more than £24 on Thursday. Prospective buyers should also keep in mind that a restructuring of this scale comes with plenty of risk. Analysts at the broker Jefferies have suggested they are worried that the company could “leak” value during this process, through areas such as capital gains taxes or “flowback”, when foreign investors may sell their shares due to a cross-border merger or acquisition.
There is still the possibility that BHP could make a renewed offer, as British takeover rules mean it can make another bid after a six-month period ends on November 29. The first £3.1 billion all-share offer was regarded as a low-ball price and came with lots of moving parts. But the bid put Anglo into play and another buyer may yet emerge.
Investors who are nervous about Anglo’s restructuring should take some comfort from the fact that Jellinbah sold at a decent premium, at a price to net asset value multiple of 1.15 times and to forecast adjusted cash profits of 4.9, ahead of other recent steelmaking coal asset transactions, including BHP’s sale of Blackwater and Daunia. This suggests that Anglo shares could still have further ground to gain as it simplifies, and an expected recovery in platinum and diamond prices, which have been trading around cyclical lows this year, could also help boost the stock. Advice Buy Why Simplification progressing well
It is easy to build an income portfolio by focusing solely on Britain’s stock market – an abundance of banks, insurers and energy companies on the FTSE 100 means there are chunky cash payouts galore.But geographic diversification is critical to building up resilient income, too. Such is the proposition of the Henderson International Income Trust, also known by its ticker HINT.
The £326 million investment trust has raised its payout for the past 12 years, at an annualised rate of 5.3 per cent. Now, having announced its total dividends for its 2024 period, it has a dividend yield of 4.4 per cent, putting it at around the highest in its peer group.
The trust is one of the smaller ones in the sector, at a £326 million market capitalisation compared with the largest in its peer group, the JPMorgan Global Growth and Income trust at £2.8 billion and the Murray International trust at £1.5 billion.
The JPMorgan fund has comfortably outperformed them both, delivering a total return of 26 per cent over the past year, compared with 14 per cent from Murray and 12 per cent from HINT.
This is reflected in its double-digit discount: shares in the trust trade 10.7 per cent below their net asset value, compared with an average of 4.5 per cent among its rivals.
The chunky discount may be tempting for some value seekers, especially as the trust owns some of the best known and most expensive names on the stock market, such as the likes of Microsoft and the giant French pharmaceutical group Sanofi.
The fund does have a respectable dividend track record, but recently some of its low-yielding shares have outperformed its higher yielding investments, which has held back its overall performance. Going forward, the trust has indicated that it may supplement its dividend from its own distributable reserves, which stood at £97.6 million as of the end of August.
This move should give it added flexibility to invest more in growth names, which may allow it to improve its capital appreciation without sacrificing dividends. It may be a difficult line to balance.
Advice HoldWhy Double-digit discount reflects rocky performance