groty's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/202488/comments http://seekingalpha.com/article/143838/comments?source=feed#comment-551932 551932
And yet the momentum guys come out gunning the stocks higher at the open again today. I don't think there's anything that can shake their desire to own these names for the nex 3-4 years......until new mines come online and create excess capacity.]]> Thu, 18 Jun 2009 10:32:27 -0400
And yet the momentum guys come out gunning the stocks higher at the open again today. I don't think there's anything that can shake their desire to own these names for the nex 3-4 years......until new mines come online and create excess capacity.]]> http://seekingalpha.com/article/126706/comments?source=feed#comment-433609 433609
I continue to think MOS and POT management are going to concede on the 1Q earnings call that they've been too optimistic about the rebound. The question is, are investors already pricing in a disappointing 2Q and full year 2009 and they're willing to own the stock at current levels in anticipation of a strong 2010 and beyond.

I obviously don't know the answer. I'm hoping for a flush after 1Q earnings are announced so I can buy the stock much cheaper, but the fact the stock is so reslient in the face of bad news makes me think I may not get that opportunity.]]> Fri, 20 Mar 2009 11:28:20 -0400
I continue to think MOS and POT management are going to concede on the 1Q earnings call that they've been too optimistic about the rebound. The question is, are investors already pricing in a disappointing 2Q and full year 2009 and they're willing to own the stock at current levels in anticipation of a strong 2010 and beyond.

I obviously don't know the answer. I'm hoping for a flush after 1Q earnings are announced so I can buy the stock much cheaper, but the fact the stock is so reslient in the face of bad news makes me think I may not get that opportunity.]]> http://seekingalpha.com/article/124114/comments?source=feed#comment-413088 413088
The MOS CEO said warehouses and distribution centers are packed with excess inventory, so 1Q shipment volumes are probably going to come in lighter than the analysts have modeled. Now factor in price declines in Brazil, and 1Q estimate are amost certainly still too high and have to come down more.

I want to own the stock for 2010 and beyond, but I think there's more downside to come. I know Doyle thinks the inventory overhang will be worked off after 1Q or 2Q at the latest, so he's expecting a very robust second half. Its been my experience that CEOs generally underestimate how long it takes to work off excess channel inventory. I hope Doyle is right, we'll see.

Good luck. I'm going to wait for more color on the 1Q conference calls before jumping in.]]> Wed, 04 Mar 2009 14:41:42 -0500
The MOS CEO said warehouses and distribution centers are packed with excess inventory, so 1Q shipment volumes are probably going to come in lighter than the analysts have modeled. Now factor in price declines in Brazil, and 1Q estimate are amost certainly still too high and have to come down more.

I want to own the stock for 2010 and beyond, but I think there's more downside to come. I know Doyle thinks the inventory overhang will be worked off after 1Q or 2Q at the latest, so he's expecting a very robust second half. Its been my experience that CEOs generally underestimate how long it takes to work off excess channel inventory. I hope Doyle is right, we'll see.

Good luck. I'm going to wait for more color on the 1Q conference calls before jumping in.]]> http://seekingalpha.com/article/123223/comments?source=feed#comment-408005 408005
I've been searching for any kind of news, and the only thing I can find is the CEO saying warehouses are packed with fertilzer bought last fall as farmers postponed their buy decisions until planting this spring hoping fertilziers prices will come down. But he made those comments the prior week and the stock really didn't move much on those comments, so I'm not sure if that's the reason for the big selloff on Monday.

Stocks just don't decline 15% in a day on 2x average volume without a catalyst, but I don't know what it was.

Any info you can provide is appreciated. Thanks. ]]> Sun, 01 Mar 2009 12:37:35 -0500
I've been searching for any kind of news, and the only thing I can find is the CEO saying warehouses are packed with fertilzer bought last fall as farmers postponed their buy decisions until planting this spring hoping fertilziers prices will come down. But he made those comments the prior week and the stock really didn't move much on those comments, so I'm not sure if that's the reason for the big selloff on Monday.

Stocks just don't decline 15% in a day on 2x average volume without a catalyst, but I don't know what it was.

Any info you can provide is appreciated. Thanks. ]]> http://seekingalpha.com/article/113844/comments?source=feed#comment-351860 351860
Pequot was also a major pre-IPO investor. However, Pequot did sell some of its stock in the IPO. While I agree 100% with your funding concerns, either Orbimed or Pequot could rescue PODD with follow on investments if the captial markets are closed to PODD when the funding is needed. Of course, that will depend on PODD continuing to track to projections and the competitive landscape. A private Israeli company, Medingo, is very close to coming to market with a diabetes "patch" device that will compete with PODD, so you have to watch closely how its product is received in the marketplace.

I've been following PODD since the S-1 filing, listening to probably 75% of all the earnings and investor related conference calls and reviewing all the 10Qs, etc. So far, they've pretty much executed how they told investors to expect they would, with a couple of blips

They've really got a very attractive business model if they can scale it to profitability before the competive environment materially changes. Each patient requires approximately 10 pods per month, so you're looking at an annuity like recurring revenue stream paid by third party payers like insurers and HMOs. But until PODD reaches profitability, you have to worry about a big breakthrough in diabetes pharmceuticals, and/or superior delivery devices coming to market. I doubt Medtronic is sitting idly by waiting for PODD to render its pumps obsolete. And there's also the question you bring up about funding.

For those reasons, I continue to montior PODD's progress, but I haven't made an investment yet.]]> Sat, 10 Jan 2009 15:27:28 -0500
Pequot was also a major pre-IPO investor. However, Pequot did sell some of its stock in the IPO. While I agree 100% with your funding concerns, either Orbimed or Pequot could rescue PODD with follow on investments if the captial markets are closed to PODD when the funding is needed. Of course, that will depend on PODD continuing to track to projections and the competitive landscape. A private Israeli company, Medingo, is very close to coming to market with a diabetes "patch" device that will compete with PODD, so you have to watch closely how its product is received in the marketplace.

I've been following PODD since the S-1 filing, listening to probably 75% of all the earnings and investor related conference calls and reviewing all the 10Qs, etc. So far, they've pretty much executed how they told investors to expect they would, with a couple of blips

They've really got a very attractive business model if they can scale it to profitability before the competive environment materially changes. Each patient requires approximately 10 pods per month, so you're looking at an annuity like recurring revenue stream paid by third party payers like insurers and HMOs. But until PODD reaches profitability, you have to worry about a big breakthrough in diabetes pharmceuticals, and/or superior delivery devices coming to market. I doubt Medtronic is sitting idly by waiting for PODD to render its pumps obsolete. And there's also the question you bring up about funding.

For those reasons, I continue to montior PODD's progress, but I haven't made an investment yet.]]> http://seekingalpha.com/article/111935/comments?source=feed#comment-336100 336100
The fertilizer guys were unbelieveably rational about capacity expansion when fertilizer pirces went parabolic beginning in late 2007 through this past summer. That means there's not a huge amount of excess supply about to come online as happened when the fertilizer cycle went bust in the late 1990s, causing fertilizer prices to collapse. Fertilizer prices are down, but they are not going to collapse, and that's probably the most important reason why I believe the weakness will be a relatively short lived. I believe it will make sense to get very bullish on fertilzers again in early 2009.

But timing is everything. ]]> Mon, 22 Dec 2008 17:15:38 -0500
The fertilizer guys were unbelieveably rational about capacity expansion when fertilizer pirces went parabolic beginning in late 2007 through this past summer. That means there's not a huge amount of excess supply about to come online as happened when the fertilizer cycle went bust in the late 1990s, causing fertilizer prices to collapse. Fertilizer prices are down, but they are not going to collapse, and that's probably the most important reason why I believe the weakness will be a relatively short lived. I believe it will make sense to get very bullish on fertilzers again in early 2009.

But timing is everything. ]]> http://seekingalpha.com/article/90907/comments?source=feed#comment-235200 235200
Go to the section (usually) labeled: "Events of Default" of any corporate loan agreement. They are often filed as exhibits to 8-Ks, 10-Qs, and 10-Ks.

Lots of things can trigger an Event of Default. Not making timely payments of interest and principal as agreed is certainly one, but there are many others.]]> Wed, 20 Aug 2008 19:53:20 -0400
Go to the section (usually) labeled: "Events of Default" of any corporate loan agreement. They are often filed as exhibits to 8-Ks, 10-Qs, and 10-Ks.

Lots of things can trigger an Event of Default. Not making timely payments of interest and principal as agreed is certainly one, but there are many others.]]> http://seekingalpha.com/article/88835/comments?source=feed#comment-222530 222530
With corn prices down over $2/bushel in less than two months, it's unreasonable to expect additonal potash prices will stick after quadrupeling to $1000/ton in two years.

'09 earnings will be close to 100% greater than full year '08 earnings, but if investors perceive the pricing cycle has peaked, the stock's long advance is over.

I believe rallies in POT should be sold.]]> Mon, 04 Aug 2008 14:33:27 -0400
With corn prices down over $2/bushel in less than two months, it's unreasonable to expect additonal potash prices will stick after quadrupeling to $1000/ton in two years.

'09 earnings will be close to 100% greater than full year '08 earnings, but if investors perceive the pricing cycle has peaked, the stock's long advance is over.

I believe rallies in POT should be sold.]]> http://seekingalpha.com/article/86199/comments?source=feed#comment-214332 214332
For example, I know they can't be the opening print and I know they can't buy during the last half hour of trading. They can't "take offers" and drive the price higher. They have to place bids below whatever the current best bid is at any given point in time.

There's also a daily volume restriction. I think its 25% of the average trading volume, but I can't remember over what period the average is calculated. It's been a long time since I learned the rules, so the rules may have changed over time or my memory may not be accurate.

But using your 11 million average figure, management could have only bought back 25%*11million = 2.75 million shares.]]> Fri, 25 Jul 2008 10:48:46 -0400
For example, I know they can't be the opening print and I know they can't buy during the last half hour of trading. They can't "take offers" and drive the price higher. They have to place bids below whatever the current best bid is at any given point in time.

There's also a daily volume restriction. I think its 25% of the average trading volume, but I can't remember over what period the average is calculated. It's been a long time since I learned the rules, so the rules may have changed over time or my memory may not be accurate.

But using your 11 million average figure, management could have only bought back 25%*11million = 2.75 million shares.]]> http://seekingalpha.com/article/86199/comments?source=feed#comment-213485 213485
Yet "the market" sold the stock down to the $190 area even though they knew management thought $203.30 represented a good use of shareholder capital.

Somebody is obviously wrong.

I have to say, I can't ever recall seeing investors willing to sell so far below the average buyback price so soon after a quarter ended. It seems irrational, but we'll only know in hindsight if the sellers at $190 and below were irrational or if it is management who was irrational for buying at $203.30.]]> Thu, 24 Jul 2008 12:35:12 -0400
Yet "the market" sold the stock down to the $190 area even though they knew management thought $203.30 represented a good use of shareholder capital.

Somebody is obviously wrong.

I have to say, I can't ever recall seeing investors willing to sell so far below the average buyback price so soon after a quarter ended. It seems irrational, but we'll only know in hindsight if the sellers at $190 and below were irrational or if it is management who was irrational for buying at $203.30.]]> http://seekingalpha.com/article/86199/comments?source=feed#comment-212542 212542
If Delta had all the $billions they spent on share buybacks, maybe they could have avoided bankruptcy. I'm not saying they would have avoided bankruptcy if they hadn't spent all that money on share buybacks, I'm just raising the possibility.

Share buybacks are an easy way to increase EPS and ROE, but they can also be an easy way for management to squander shareholder's capital and benefit only the select few who sold their stock back to the company.]]> Wed, 23 Jul 2008 13:49:10 -0400
If Delta had all the $billions they spent on share buybacks, maybe they could have avoided bankruptcy. I'm not saying they would have avoided bankruptcy if they hadn't spent all that money on share buybacks, I'm just raising the possibility.

Share buybacks are an easy way to increase EPS and ROE, but they can also be an easy way for management to squander shareholder's capital and benefit only the select few who sold their stock back to the company.]]> http://seekingalpha.com/article/85527/comments?source=feed#comment-208892 208892
You asked:

"But what if the price holds for a while, plus or minus 10 - 15%? Won't that turn POT into a nice fat cash cow and they can use it to expand opperations leading to greater future volume & possibly gain market share (assuming management finds acceptable deals)?

Or they could pay out heafty dividends which would support the stock price to some extent."

All true. But once pricing moves as far above marginal cost as potash is now, the rational response is for producers to eagerly bring new capacity online as soon as possible. It takes years to bring new greenfield mines online, but once the consensus is overwhelming convinced pricing has peaked, I'd expect the stock will start a slow stready grinding down. That's been my experience with how cyclicals trade.

'09 estimates for POT have already doubled in the past 90 days. AFTER those estimates were raised, the sell side is now falling all over themselves to increase their price targets and ratings on the stock.

I don't like it. I'm very cautious.

If pricing hasn't peaked, then some hedge funds will sniff it out within the next few weeks and start buying again. I'll wait for the market action to tell me it's time to get long again. ]]> Fri, 18 Jul 2008 14:08:44 -0400
You asked:

"But what if the price holds for a while, plus or minus 10 - 15%? Won't that turn POT into a nice fat cash cow and they can use it to expand opperations leading to greater future volume & possibly gain market share (assuming management finds acceptable deals)?

Or they could pay out heafty dividends which would support the stock price to some extent."

All true. But once pricing moves as far above marginal cost as potash is now, the rational response is for producers to eagerly bring new capacity online as soon as possible. It takes years to bring new greenfield mines online, but once the consensus is overwhelming convinced pricing has peaked, I'd expect the stock will start a slow stready grinding down. That's been my experience with how cyclicals trade.

'09 estimates for POT have already doubled in the past 90 days. AFTER those estimates were raised, the sell side is now falling all over themselves to increase their price targets and ratings on the stock.

I don't like it. I'm very cautious.

If pricing hasn't peaked, then some hedge funds will sniff it out within the next few weeks and start buying again. I'll wait for the market action to tell me it's time to get long again. ]]> http://seekingalpha.com/article/85527/comments?source=feed#comment-208224 208224
So, the point is that the minute the pricing cycle peaks, the stock will become toxic even though earnings won't peak for a few quarters after the pricing peak because price increases go into effect with a lag.

The stock sells off after every price increase is announced because people want to believe pricing just can't go any higher.

Is $1000/ton peak pricing? That is the only relevant question.]]> Thu, 17 Jul 2008 21:25:10 -0400
So, the point is that the minute the pricing cycle peaks, the stock will become toxic even though earnings won't peak for a few quarters after the pricing peak because price increases go into effect with a lag.

The stock sells off after every price increase is announced because people want to believe pricing just can't go any higher.

Is $1000/ton peak pricing? That is the only relevant question.]]> http://seekingalpha.com/article/83685/comments?source=feed#comment-200214 200214
The point is, with central banks tightening, I think investors are starting to discount a synchronized global slowdown. All the high fliers mentioned are economically senstive, so they are getting wacked. If a sharp global slowdown does materialize, those stocks will be toxic even though they look "cheap" on '09 earnings estimates.]]> Mon, 07 Jul 2008 18:41:21 -0400
The point is, with central banks tightening, I think investors are starting to discount a synchronized global slowdown. All the high fliers mentioned are economically senstive, so they are getting wacked. If a sharp global slowdown does materialize, those stocks will be toxic even though they look "cheap" on '09 earnings estimates.]]> http://seekingalpha.com/article/80711/comments?source=feed#comment-183656 183656
POT is trading at 13x the current consensus earnings estimates for 2009. But potash pricing keeps going up, and will continue to do so, so those '09 estimates are too low. I know potash prices are going to continue to go up because potash pricing has tripled within two years and POT still has to "allocate" product to customers. In other words, there's not enough of the stuff even at these elevated prices to meet demand. It takes 5-7 years to bring a new potash mine online, so there's going to be limited new supply for quite some time. But make no mistake, these stocks will crater hard when investors start to worry about new capacity coming online. But that isn't a threat for quite some time.

It's no bubble. Fundamentals are driving phenomenal earnings growth. As earnings estimates keep getting revised upward, the stock price will follow.

Goldman has it right.]]> Wed, 11 Jun 2008 17:00:34 -0400
POT is trading at 13x the current consensus earnings estimates for 2009. But potash pricing keeps going up, and will continue to do so, so those '09 estimates are too low. I know potash prices are going to continue to go up because potash pricing has tripled within two years and POT still has to "allocate" product to customers. In other words, there's not enough of the stuff even at these elevated prices to meet demand. It takes 5-7 years to bring a new potash mine online, so there's going to be limited new supply for quite some time. But make no mistake, these stocks will crater hard when investors start to worry about new capacity coming online. But that isn't a threat for quite some time.

It's no bubble. Fundamentals are driving phenomenal earnings growth. As earnings estimates keep getting revised upward, the stock price will follow.

Goldman has it right.]]> http://seekingalpha.com/article/80577/comments?source=feed#comment-182110 182110
Plus, no matter how much due diligence BAC is doing on CFC, it's impossible to estimate with any degree of accuracy the litigation risks they are facing and how regulatory mortgage/banking reforms will impact the business.

Seems like a value trap.
]]> Mon, 09 Jun 2008 18:39:34 -0400
Plus, no matter how much due diligence BAC is doing on CFC, it's impossible to estimate with any degree of accuracy the litigation risks they are facing and how regulatory mortgage/banking reforms will impact the business.

Seems like a value trap.
]]> http://seekingalpha.com/article/78842/comments?source=feed#comment-176953 176953
Good luck finding a buyer for 170,000 calls. I'm not going to count the open interest for all contracts, but just eyeballing it I'd estimate the open interest for all strikes going out to January 2010 is about 12,000 contracts. And you think Buffett could find a buyer for 170,000 contracts?

The only buyers would be a gunslinging hedge fund or an I-bank prop desk, both of whom would only do the trade if they could not only screw you on the premium paid but also hedge their exposure.

I've already shown it would take about 8 months to sell 17,000,000 shares (i.e, hedge 170,000 options). Nobody is going to buy 170,000 calls from Buffett because the trade can't be hedged.]]> Fri, 30 May 2008 15:26:03 -0400
Good luck finding a buyer for 170,000 calls. I'm not going to count the open interest for all contracts, but just eyeballing it I'd estimate the open interest for all strikes going out to January 2010 is about 12,000 contracts. And you think Buffett could find a buyer for 170,000 contracts?

The only buyers would be a gunslinging hedge fund or an I-bank prop desk, both of whom would only do the trade if they could not only screw you on the premium paid but also hedge their exposure.

I've already shown it would take about 8 months to sell 17,000,000 shares (i.e, hedge 170,000 options). Nobody is going to buy 170,000 calls from Buffett because the trade can't be hedged.]]> http://seekingalpha.com/article/78842/comments?source=feed#comment-176904 176904
Buffett's positions are often so large he can only sell when the stock is in a parabolic upmove, as he did with PTR. If he waits until other larges holders are in distribution mode (after April 2006 in this case), he will destroy the stock.

Your argument makes more sense if you frame it that he should have sold from January to April 2006 (hindsight is always 20/20), when the stock was in its parabolic uptrend and traded roughly between $70 and $120. Just eyeballing the volume that traded then, I'd estimate it traded about 1 million shares per day. Even when a stock is in a parabolic uptrend, anyone who tries to trade more than 10% of the daily volume will move the market. So Buffett could only have traded about 100,000 shares per day without putting pressure on the stock price.

100,000 shares per day*22 trading days per month*4 months means Buffett could have only sold about 8.8 million shares at prices between $70 and 120 from Janaury to April 2006. After the peak, the stock dropped from $120 to $60 in about 2 months. If he had been a seller of even 10% of the daily volume then, he would have absolutely destroyed the stock. ]]> Fri, 30 May 2008 14:17:28 -0400
Buffett's positions are often so large he can only sell when the stock is in a parabolic upmove, as he did with PTR. If he waits until other larges holders are in distribution mode (after April 2006 in this case), he will destroy the stock.

Your argument makes more sense if you frame it that he should have sold from January to April 2006 (hindsight is always 20/20), when the stock was in its parabolic uptrend and traded roughly between $70 and $120. Just eyeballing the volume that traded then, I'd estimate it traded about 1 million shares per day. Even when a stock is in a parabolic uptrend, anyone who tries to trade more than 10% of the daily volume will move the market. So Buffett could only have traded about 100,000 shares per day without putting pressure on the stock price.

100,000 shares per day*22 trading days per month*4 months means Buffett could have only sold about 8.8 million shares at prices between $70 and 120 from Janaury to April 2006. After the peak, the stock dropped from $120 to $60 in about 2 months. If he had been a seller of even 10% of the daily volume then, he would have absolutely destroyed the stock. ]]>