The-Yellow-Rose-Street-Beat

Trying to Defend Mosaic

BTW Mish... great blog. I've been following it for some time.

Trying to Defend Mosaic

I've been following these stocks intently for quite a while and own shares in both MOS and POT. This is really about the hedge funds. It's a scheme that has made certain people/companies a lot of money. A lot of the hedge funds use computers that look for phenomenal earnings stories like these. This propelled the stocks earlier in the year. However, unlike most retail investors, the hedge funds acted ina completely irresponsible manner and levered to the hilt to supercharge returns (without hedging of course). You know this already right?

What may not be as obvious is that the downturn here may have been planned. I have found articles about the forced deleveraging but as I an not in NY the following is just a theory on my part... but one that makes a lot of sense. A group of smart hedge funds/big money may have purposefully sold at higher levels and shorted the stock to drive the price down. The result would be margin calls on overleveraged hedge funds and forced selling... which would drive the price lower and cause more forced selling... at which point the stocks would be further shorted... etc. etc. etc. Then you get bankruptcies (i.e. ala Ospraie) which cause fear and selling and more selling and the cycle goes on until some catalyst comes in (like the original bail-out proposal which bumped these stocks for a while... or the POT announcement of increasing buybacks etc. ) Ultimately the selling comes back on line and probably will until real money (i.e. cash) replaces the huge leveraging.

It's kind of like the short on currency in Asian countries in the 90s or the Soros/Rogers attack on the Pound in the early 90s (read about black Wednesday on Wikip).- when there is too much weakness for any reason the savvy and powerful smell blood. I think that many retail investors, including me, that knew nothing about all of this saw great companies whose earnings were likely largely resistant to the recession and have been unfortunate enough to be unwittingly involved in the war games of the rich and powerful.

Its like nothing I have ever seen before. Lesson learned. Still, in the long long run markets cannot be manipulated. Just ask Dow.

Potash, Mosaic Are Looking Fertile

I have never ever ever ever heard a CC like POT last one. I mean, it was beyond the point of "great quarter guys". It was: we've been waiting 20 years as a company for this moment to arrive and now it has. The growth here will be scary good. Even with the run-up.

Yet POT will likely fall due to one major factor: Sector Rotation. AG and Oil sectors have been the place the big money has chosen as the safe haven in recent times. They have run enormously and the money has to go elsewhere for a bit. In fact I think that POT and MOS and AGU would have fallen further if not for the unbelievable quarters. If your willing to deal with some short-term stock price drops the dips here represent buying opportunities. However I like the author would buy in pieces here... I am considering opening a small position here and would add more if it drops to the 170s or lower...

Ag Stocks Could Have Steep Pullbacks

Is he writing this article to help record his own truthful convictions or is he writing this article because he wants the price to pull back to buy more shares.

I don't know him so I don't know. Anyone who has been following him for a while might be able to provide some useful insight here.