Failure to recognise vulnerabilities behind my error in Noble

IN 2009, Noble invited analysts to tour its facilities in Argentina. I was then an equity analyst with RBS covering commodity stocks. The chance to visit one of the world's leading commodity traders was hard to ignore.

Noble was like Teflon in the 2008 financial crisis. It was immune to the horrific counterparty risk that shook commodity trading. The company was cash-rich and its cash cycle was just 14 days, which was a tenth of that of its rival Olam.

Richard Elman, its gruff founder, personified Western enterprise in the East. He named the company after Noble House, James Clavell's fictional trading house in Hong Kong. Mr Elman built a massive company from modest origins as middleman in Hong Kong in the 1960s. He initially supplied Chinese steelmakers with iron ore. By 2009, Noble was a vast conglomerate with Australian mines, Brazilian sugar mills and American fuel terminals. It was then a US$35 billion giant with a market capitalisation of US$5 billion.