The Market Vectors Agribusiness ETF (MOO) has recovered strongly from the lows of 2008/09, up 150%, and is also up 10% YTD and is trading near 52-week highs. In this article, via an analysis based on the latest available Q4 institutional 13-F filings, we identify the agriculture and agricultural chemicals (AgChem) group companies that are being accumulated and those being distributed by legendary or guru fund managers, such as Warren Buffet, George Soros, Carl Icahn, Steven Cohen and Mario Gabelli, that are well-known for their savvy in picking winning stocks year after year. Taken together, these guru managers are bearish on the group, cutting a net $159 million in Q4 from their $4.46 billion prior quarter holdings in the group (for more general information on these guru funds, please look at the end of the article).
The following are the Agriculture and AgChem group companies that these legendary or guru fund managers are most bullish about, and that are also trading at a discount to the peers in their group (see Table):
Dow Chemical Co. (DOW): DOW is a science and technology company that manufactures plastic, chemical and agricultural products for the global food, transportation, health and medicine, personal and home care, and building construction markets. Guru funds together added a net $73 million in Q4 to their $64 million prior quarter position in the company, and taken together guru funds hold 0.4% of the outstanding shares. The top guru fund buyer was guru fund manager and billionaire James Dinan's event-driven hedge fund York Capital Management ($117 million), also the top holder at $117 million.
DOW last week announced a 28% increase in its second quarter dividend to 32c from 25c/share, and in its latest Q4 announced in February, it missed earnings (25c v/s 30c) and revenue estimates ($14.1 billion v/s $14.25 billion). The stock since has flat-lined, and currently trades at 10 forward P/E and 2.2 P/B compared to averages of 11.3 and 2.5 for the diversified chemicals group.
Bunge Ltd. (BG): BG is an integrated global agribusiness and food company, involved in the purchasing, storage, transporting, processing, and selling of agricultural commodities and commodity products, such as oilseeds and grains, and in the production of fertilizers, edible oils and milling products. Guru funds together added a net $11 million in Q4 to their $3 million prior quarter position in the company, and taken together guru funds hold less than 0.2% of the outstanding shares. The top guru fund buyer was legendary billionaire investor Ken Griffin's Chicago-based hedge fund Citadel ($10 million), also the top holder at $12 million.
BG shares have rallied strongly this year, up nearly 20% YTD, after it announced a good Q4 in early February in which it handily beat analyst revenue ($16.45 billion v/s $13.69 billion) and earnings estimates ($1.65 v/s $1.54). Earnings growth has recovered strongly since the 2008/09 lows, up from $1.50 in 2009 to $5.80 in 2011 and projected to further rise to $7.35 by 2013, while its shares trade at a discount 11.2 current P/E (on a TTM basis) and 0.9 P/B compared to averages of 12.0 and 1.2 for its peers in the agricultural products group.
The following are some additional agricultural and AgChem companies that guru fund managers accumulated in Q4 (see Table):
- Monsanto Co (MON), a manufacturer of corn and other crop seeds and crop protection products for growers worldwide, in which guru funds together added a net $163 million in Q4 to their $670 million prior quarter position in the company; and
- Titan Machinery Inc. (TITN), owner and operator of full service agriculture and construction equipment stores in the U.S., in which guru funds together added a net $2 million in Q4 to their $1 million prior quarter position in the company.
Besides these, guru fund managers based on their Q4 trading activity indicated that they are bearish on the following agriculture and AgChem group stocks (see Table):
- Potash Corporation of Saskatchewan, Inc. (POT), the world's largest integrated fertilizer and related industrial and feed products company by capacity, in which guru funds together cut a net $219 million in Q4 from their $295 million prior quarter position in the company;
- Mosaic Inc. (MOS), one of the world's leading producers and marketers of concentrated phosphate and potash crop nutrients for the global agriculture industry, in which guru funds together cut a net $176 million in Q4 from their $449 million prior quarter position in the company;
- DuPont De Nemours & Co. (DD), that manufactures agricultural, food, building, communications, construction, electronics and other products and raw materials, in which guru funds together cut a net $126 million in Q4 from their $201 million prior quarter position in the company;
- CF Industries Holdings (CF), a manufacturer of phosphate fertilizers, including urea, ammonia and urea ammonium nitrate in North America, in which guru funds together cut a net $35 million in Q4 from their $144 million prior quarter position in the company;
- Deere & Co. (DE), one of the world's leading producers of agricultural equipment, as well as a leading manufacturer of construction, forestry and commercial and consumer equipment, in which guru funds together cut a net $13 million in Q4 from their $562 million prior quarter position in the company;
- CNH Global NV (CNH), a Netherlands-based global manufacturer of backhoe/skid steer loaders and tractors for the agricultural and construction markets, the number one manufacturer of agricultural tractors and combines in the world, the third largest maker of construction equipment, and one of the industry's largest equipment finance operations, in which guru funds together cut a net $7 million in Q4 from their $147 million prior quarter position in the company;
- Archer Daniels Midland (ADM), a world leader in the procurement, transportation, storage, processing and merchandising of agricultural commodities and products, both in the U.S. and internationally, in which guru funds together cut a net $2 million in Q4 from their $144 million prior quarter position in the company; and
- Terra Nitrogen Co. (TNH), a manufacturer of fertilizers, including urea, ammonium nitrate and ammonia, and a $5.0 billion market-cap company, in which guru funds did not hold a position in Q3 or Q4.
Table
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Credit: Fundamental data in this article were based on SEC filings, Zacks Investment Research, Thomson Reuters and Briefing.com. The information and data is believed to be accurate, but no guarantees or representations are made.
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