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Some thoughts about cresud

|Includes:Cresud S.A.C.I.F. y A. (CRESY)

If You look at CRESY at seeking alpha You easily find very detailed and knowledgeable articles and each of them bear interesting discussion.

So, why to write an instablog. I just want to itemize those of the pros and cons which were for me of most relevance.

1. Top down
We are now more than 7 billion humans and the earth population is still growing. Arable land is not growing. So the value of farmland will grow at least mid-term.

George Soros and China are grabbing farmland in South America. It cannot be wrong to follow them before farmland investment become a hype again.

Ha prices of the fertile black earth soil in Russia and Ukraine are substantially lower than those in South America, but those in South America are substantially lower than in US, Canada or Western Europe. It makes sense to geographically diversify farmland investments. So to invest in Eastern Europe does not exclude South America but demands it.

2. Alternatives
Adecoagro (NYSE:AGRO), SLC Agricola - these both are relatively young compared to CRESY and this leads me to a important topic: The valuation of farmland for the balance sheet. CRESY values its land bank at cost and not mark to market. They bought the land years ago and so I assume cheaper than it would be possible today.

Liquidity at US-exchanges of CRESY is better than any other South American or Eastern European company. This should not be underestimated. CRESY even seems to be a global blue chip if You look for farmland stocks

3. Specifics of CRESY
CRESY is an Argentinean company and generates income in Argentinean Pesos. Whilst everyone is looking at BRIC and thus the Brasilia Argentina just emerges from a very severe crisis. So there should be a significant upside potential for Argentina and economic success of Argentina will reduce political risks for CRESY and appreciate the Pesos.

P/B of CREY is little above 1 and below long term average. Since the farmland is valued at costs there should be an upside potential

Major Shareholders. There are several funds and institutions among the Shareholders of CRESY.

But now let us have a look at some risk factors:
Gains will depend on weather conditions. This is inevitable for farmland stocks. And there will be El Nino years to come. But there is a certain internal geographical diversification by CRESY's investments in Brasilia and Bolivia.

South American political climate especially in Bolivia is not as friendly for private investors as other regions. There is a substantial risk of interferences. Anyway I think Bolivia this risk is overestimated. F. E. Pan American Silver runs a silver mine in Bolivia, which is a much higher investment than CRESYs Bolivian farms.

So I bought today some CRESY shares. I intend to increase this.

Stocks: CRESY