What: The share prices of Rio Tinto Limited (ASX: RIO) and Woolworths Limited (ASX: WOW) are both down around 22% over the past 12 months.
That statistic however fails to capture the extent of the fall which shareholders in Rio Tinto have endured over the past year (closer to 40%), or the extent of the rebound from those February lows (around 20%).
In contrast, Woolworths' share price remains bumping along the bottom near its one-year low.
So What: The recent gains in Rio have coincided with a rally in key commodity prices. According to one fund manager there could be further gains ahead and interestingly his investment thesis isn't predicated on higher commodity prices.
Now What: In a recent interview with the Australian Financial Review, Mr Aaron Binsted from Lazard Asset Management noted that his positive view on Rio Tinto comes despite expectations that iron ore prices will fall.
Rather, Binsted believes that Rio's "cost base will improve as the Australian and Brazilian currencies fall."
While Binsted sees value on offer from the beaten-up Rio, he's not of the same view when it comes to Woolworths. His concern regarding Woolworths is that there could be more losses ahead for Australia's largest retailer. For this reason, Binsted is choosing to watch Woolworths from the side-lines rather than risk catching a falling knife for now.
