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Anglo American PLC (AAUK) has been the second-worst performer among the world's major diversified mining companies over the last five years. But is now the time to buy?

BMO Capital Markets analyst Tony Robson is not so sure. He noted that London-based Anglo has been a chronic underperformer for a number of reasons: lacklustre management, a weak corporate structure, poor operational performance at many of its mines, and myriad problems in South Africa (where it does a great deal of business).

However, the company has turned over much of its management team under chief executive Cynthia Carroll, and Mr. Robson figures that is key to its future.

He wrote in a note to clients:

Anglo American suffers from comparisons with other large-cap diversified miners. The best chance of [Anglo] outperforming its peers, in our view, would be the new management team delivering large cost savings.

He also named a number of other things that need to go in Anglo's favour for it to outperform its rivals: a low South African Rand, stronger asset allocation by management, and strong prices for platinum, rhodium, palladium and diamonds relative to other commodities.

Mr. Robson initiated coverage on the stock with a "market perform" rating and a target of £15.00 a share. He noted that it trades at 0.4 times net asset value, which is at the upper end of the range for large-cap diversified miners. He expects earnings per share to fall 51% in 2009 because of low prices for iron ore, thermal coal and copper.

Source: Anglo American's New Management Is Key to its Future - BMO