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Buying Fertilizer Stocks In Lieu of Camel Futures

A second wise man is found posting on Seeking Alpha!

The first being Eli Hoffmann. Thank you for the daily updates. I also use 24/7 wall which provides fairly current market info.

Nice article. It's nice to see someone that doesn't lump all commodities together and can see the play that is still left in fertilizer. Just like every stock that drops by 1/2 is not necessary cheap. Every stock that has a monumental rise is not necessary expensive. As with every ass class (expect maybe fine art and luxury homes) Income = value. JP Morgan who is no newcomer to this game and maybe could be considered by some to be the king of the hill in the investment banking game is calling POT 2009 eps at $18. Yes 2009 is far off, but, what if they are right. Where does that put POT. Could someone comment on the 3 for 1 split that POT has listed on there website. That would make a catchy HEADLINE and would likely create many links for SA.

Potash/Fertilizer Industry: The Week That Was

Potash-POT: Sinofert says they will have a 3M shortfall, a positive for POT@BMOC
May 6, 2008 10:44:00 AM
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BMO Capital said Sinofert Holdings, the largest distributor of imported fertilizers in China, expects a 3M ton shortfall in China this year. The firm views this as positive for POT and pricing.

3,000,000 tons shortfall.

IPI the largest US supplier only makes 980,000 tons at full capacity !

Pot is going UP UP UP.

As With Fertilizer Commodities, POT Bubbles

We had our POT sell-off starting on April 28th.

If you look back to Jan 16th it did the same thing. Ran up and sold off back to the 50 DMA. It took 5 trading days to hit bottom and 5 to come back to its previous high. That is a fast turn around. This time around we hit major resistance on day 4 (May 1st) at $175 instead of the $168/share 50 DMA. This occurred with considerable negative chatter of the FED putting future rates on hold, commodity crashes and random deception and ignorance across the board. In the end Income = Value. It might not be a straight line but income will always assert itself.

I believe we will hold on Monday May 5th and 5 days out we will be in the upper 190's or low 200's back were we started on April 28th. I believe we will not return to the magic $168 / 50 DMA this time due to all the positive information about 2008 earnings and 2009 earnings. JP Morgan who has seldom missed a call and has POT 2008 EPS at $11 and 2009 at $18/EPS. Gas & oil trust, tankers, and utils that are valued solely on current income have higher PE's then this with low growth.

So what if hedges and private equity want to "sector rotate" selloff for greener pastures (faster profits). Who can blame them; they are up $40/share on 1,000,000 shares or more typically. Most of them need to grab whatever money they can after all the losses they have taken on financials, homebuilders, insurance, ect. We still have 73% Institutional ownership on POT, 64% on MOS, 58% on AGU and who knows how much on the new IPO deal (IPI). Retail ( that is us ) and the long money institutions are not going anywhere anytime soon. Why would you sell off now when you have an 64% EPS increase coming next year.

The correction happened and it will not last long. Potash prices are real and not speculative. Israel just sold $650/ton pot to China last week.


No shorts in sight as of last week POT has 1% short float, AGU has 1.12%, and MOS has 2.68%.
Compare this to say Lennar Homes of 26%, Citi Group 12.85%.
Now think IBM short float 1.28%.
Which camp is POT in?

Best Regards,

As With Fertilizer Commodities, POT Bubbles

Your analysis is lacking in very basic elements (reason, understanding of financial valuation, understanding of the industry and specific company you are writing about). How does something like that happen. Who gave you the spot light? I think everything has been said above, but in the event that you didn't get it.

There may be 300 years of Potash in the ground. That is a good thing for a potash mining company that owns those resources or leases them. Income = value at the end of the day. Hedge & private equity may play with the stock but when all is said and done its income that creates value. If you would do just a bit more research you would find that currently yearly production (that potash that can actually be removed from the earth in a year) is short demand. This is evidenced in the fact that we have seen a 100% increase in potash/ton pricing since Nov 2007. This is the reason a farmer or industrial user would pay more. This, short of a monopoly situation, is the only reason anyone pays more for a product. This is even more true in the case of quasi commodity products like fertilizer. The current potash/ton pricing direct from the companies sales sheet effective June 1st from their warehouse FOB is $565. If you are unsure email investor relations and they will produce a copy for you. Additionally, there are many indicators that this price will press beyond this level over the next 12 months and further upside over 24 months. See JP Morgan, RBC, Citibank analyst recent comments and income and price targets. If you have not seen Bloomberg, NY Times, or any other major business or general news provider recently you would not know about all of the chatter of food shortages around the world. Americans feel it last as they typically have enough money to outbid poor nations for food. I don't mean to be overly critical of your article. Your analysis is that of a freshman college student trying to bluff there way through an economics 101 exam. Pot was selling at retail once it hit the $215 area. Fast money doesn't have much patience when they don't see much more upside and therefore you see POT today at $180. They are banking there profit and some are moving on. We have no guarantee by far that we will hit $1,000/ton potash. However, I don't see many shorts on POT and there is a reason for that. Nice try kid. I am sure you could have constructed a better negative argument for POT. Not a strong one but at least one with some logic to it and without so many elemental errors. Next time do some more work before you talk and someone might listen.