Why I'm Buying More Mosaic Ahead of Earnings

I Bought 100 shares here in the $98s as the stock has pulled back 6%; I continue to marvel at the price of this stock, which should be north of $120 in my book. Earnings are this Friday, and aside from the great story in potash, the story in phosphate might be even more unbelievable in the near term. I continue to believe this quarter's estimates of $0.95 are too low. Normally I don't buy anything ahead of earnings due to the heightened risk but, this is one I will bend that rule for.

Mosaic (MOS) is now a 5% stake in the fund, up from 4.2% entering the day. If the stock is dropped to $90 or so, I'll move this back up to a 6-8% type of position. If we ever see low $80s again it will probably go to a 10%+ position...

Note this is not a "technical" buy - the chart is actually showing a series of lower highs, so one might argue for the very near term it is actually a good short (which I could not argue with) but the focus in this fund is longer term fundamentals, and I can't find a space with better so I'll continue to layer in as the stock drops. Main concern with these type of "winning" stocks is hedge funds continuing to need to deleverage and sell what they can since they cannot sell the illiquid junk.

EDIT @ 12: 58 PM: Added another 50 shares @ $100. Now up to 5.4% stake

Disclosure: Long Mosaic in fund and personal account

Comments

[Mr. Peanuts:]

ZZZZZZZZZZZZZZZZZZZZZz...

I think I'll switch on CNBC

2008 Mar 31 06:53 PM

[Jethro:]

OK I hate to seem too critical, but there's not much here to convince me to buy MOS.

2008 Mar 31 07:44 PM

[Camden:]

I've got to agree with Jethro here. In fact, Trader Mark makes a better case for the short term bears than the bulls.

Also, it sure would be nice if Seeking Alpha could find some bloggers that have a bit more skin in the game than a few hundred shares. Trader Mark MAY be a great trader, but knowing the relatively small size of his trades (not to mention the lack of persuasive information for his buying decision) makes me feel like he's a unseasoned investor/trader.

2008 Mar 31 11:34 PM

[Jake2:]

G44: Et tu, Brutus?

2008 Apr 01 01:54 AM

[MT Invest:]

The crop report is interesting and certainly has some bearing on certain elements of the market and trade, but supply and demand does and will continue to rule. Hedge funds continue to exert their buying and selling power and drive the sector up and down to their advantage. MOS and many of the Agricultural plays are simple science.

The increase in soybean planting doesn’t give me a nervous tick or a hedge fund Jekyll and Hyde mood. The smart agricultural trades and will be sweet spots for some time to come.

Speaking of the hedge funds, make no mistake about it, they cast the largest shadow in these plays are undoubtedly the primary movers and shakers of this sector.

Short sellers try their best to talk virtually every sector and stock down to manipulate the markets. They love MOS, MON, POT, and many of the others in this sector because they know that they have a great future and can move the stocks down because they know the supply and demand facts are just that, “Facts” that for the foreseeable future cannot be disputed.

There is a quantum shift in the ability of second and third world countries to provide a wider range of foods for their people, and the future of the emerging markets is just that, “Emerging,” and utilizing their natural and human resources to become a force in the world economy.

However, let's not forget the huge deal (350,000 metric tons) with India and price increase (raised to $355 per metric tons) from the prior year contract. Keeping it simple, very few industries have a future like agricultural based products?

The other element is that yes, soybeans are being planted at a higher rate in this new growing season, but overall, demand for corn and other crops requiring nitrogen based products is up and growing.

It is not a stretch to see a fairly consistent trading range for MOS in between $105 to $125 for the rest of this year. Ups and downs are inevitable with any stock, but the agricultural related trades are one of the few areas that can provide you with the assurance that what goes down, must come up because more and more people are eating more and expanding their dietary choices.

2008 Apr 01 11:19 AM

[Camden:]

Jake, I call 'em as I see 'em.

Also interesting is that Yahoo now seems to consider items from Seeking Alpha to be "news". A sign of the times.

2008 Apr 01 03:28 PM

[TraderMark:]

Just fyi, I cut back on Mosaic today for various reasons but simply safety going into earnings; will buy back in after the dust settles Friday either up or down :)

www.fundmymutualfund.c...

Just wanted that stated since I made a strategic change in direction after thinking about it - better to miss some upside in case the herd reacts negatively to what I'm sure will be fine numbers.

2008 Apr 02 03:50 PM

[Great Wazoo:]

I am long about 8% in MOS and should have made it 10% two days ago at 96. Whether people plant corn or soybeans, they still need fertilizer. With contract prices going through the roof, I can't wait till they sign up China for a huge increase.

2008 Apr 03 01:47 PM

[Great Wazoo:]

G44 - For what it is worth, I have a lot more than 100 shares of MOS, as well as a large position in POT and a smaller one in MON. Being brave, or perhaps foolish, I held my position in MON yesterday, and will hold my position in MOS thru Friday. I love to see the short sellers have to cover their bets.

2008 Apr 03 01:54 PM