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Three (3) Legendary Commodity Investors (GLD, ABX, GG, GDX, GDXJ)

November 2nd, 2011

Jared Cummans: Commodity investing used to be something that was left only for experts and farmers who fully understood the nuances of these trading tools. But in recent years the space has been cracked open with a number of mutual funds and exchange traded products hopping in on the action and increased popularity. Now, even the average Joe can gain access to something as obscure as cocoa futures through a single equity ticker. But it was before the widespread use of commodities that legends were born, as some of the world’s most famous businessmen made fortunes playing the commodity space, paving the way for future investors [see also Three Things Wall Street Journal Didn’t Tell You About Commodities].

Below, we outline three of the biggest names in commodities and some of their most famous returns and trades:

1. Jim Rogers


No list of commodity investors would ever be complete without this name, as Rogers is perhaps the most famous and popular face tied to the commodity sector. Rogers has a bachelor’s degree from Yale and as well as a BA from Oxford University. He put his name on the map from the joint-effort with George Soros to create the Quantum Fund; this was considered one of the first truly international products. The fund raked in gains of over 3,000% from 1970-1980 compared to the S&P 500 which posted advances of just 47%. After retiring from the fund in 1980 (where he had already amassed a sizeable fortune), Rogers moved on to ride his motorcycle across the world, with over 100,000 mile logged. Rogers spent his time studying investments and learning about global financial markets during this trip. In 1998, Rogers released his own commodity index, the Rogers International Commodity Index (RICI) propelling himself into the commodity space [see also Invest Like Jim Rogers With These Three Agriculture Stocks].

After taking another trip around the world in the late 90′s, Rogers dove further into the commodity space. In 2005, Rogers wrote the book Hot Commodities: How Anyone Can Invest Profitability in The World’s Best Market in which Rogers argues that commodities have been one of the best investments over time, contrary to conventional wisdom. In 2010, Rogers responded to the Fed’s $600 billion asset repurchasing program by stating that “the power is shifting again from the financial centers to the producers of real goods. The place to be is in commodities, raw materials, natural resources”. Today, the RICI is sitting around 3,600, marking an appreciation of  approximately 360% compared to the near flat returns of the S&P 500 over that same time period [see also Dividend Special: Top Companies In Every Major Commodity Sector].

Rogers currently resides in Singapore with his wife and family as he believes that Asia is the next real area of growth and economic prosperity. Rogers has a particular niche for agriculture investing but is also known for heavy allocations to gold and other commodities.

2. George Soros

George “The Man Who Broke The Bank Of England” Soros is most famous for his extremely controversial bet against the British pound in the early 90′s which yielded him over $1 billion in just one week, as the pound plummeted. In fact, the U.K. Treasury estimated that on the fateful “Black Wednesday”, Soros cost the country over 3.4 billion in pounds. Soros, age 81, is an alma mater of the London School of Economics and got his start as an arbitrage trader among other jobs before eventually forming the Quantum Fund with Rogers. As the founder of Soros Fund Management, Soros has been most famous for his currency bets through out the years though he does have a soft spot for one hard commodity [see also Three Reasons Why Gold Is Overvalued].

Soros has been a major proponent for gold through out the years and with the assets he has poured into the elusive metal, he makes the list as a legendary commodity investor. Soros had major stakes in the SPDR Gold Trust (NYSE:GLD) for a long period of time before recently declaring that asset class to be bubbled. Shortly after this statement, Soros dumped a number of gold assets in the first quarter of 2011, totaling to nearly $800 million. While he lost faith in gold itself, Soros did up his stake in Barrick Gold (NYSE:ABX) as he clearly feels that the best way to currently play this “bubbled” asset class is through the mining space rather than direct commodity exposure [see also 50 Ways To Invest In Gold].

3. Eike Batista

Eike Batista is best known as a Brazilian Entrepreneur and the president of the EBX Group, a holding company Batista founded in the early 80′s. Batista is the definition of a go-getter; as a college dropout, he started his own gold trading firm at the ripe old age of 21. Within a year a half of trading this commodity, he had earned the equivalent of $6 million. His interest in gold did not stop there, however, as he went on to develop one of the first mechanized gold mining plants in the Amazon region, thus forming the EBX Group. By the time he was 29, he became the CEO of TVX Gold; just one of the ventures that allowed him to create $20 billion in total value between 1980 and 2000, making him one of the most rich and powerful men in the world [see also The Guide To The Biggest Companies In Every Major Commodity Sector].

Today Batista’s EBX Group owns a wide variety of subsidiaries, the majority of which deal with commodities, with their largest output coming from iron ore. Batista’s operation also has its hands in a number of other operations like natural gas and crude exploration as well as a more recent venture into a solar plant in Brazil. He has become famous for big bets in precious metals and the mining industry overall, with several of the underlying subsidiaries of the EBX Group dedicated to mining. As of 2011, Eike Batista has an estimated net worth of over $30 billion and was names Forbes’ 8th richest man in the world, giving him a large amount of power and influence in the commodity space that he already dominates [see also Analyzing Five High Yielding Oil & Gas Pipeline Stocks].

Written By Jared Cummans From CommodityHQ Disclosure: No positions at time of writing.

CommodityHQ offers educational content, analysis, and commentary on global commodity markets. Whether you’re looking to speculate on a short-term jump in crude or establish a long-term allocation to natural resources, CommodityHQ has the information you need.

 


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