einstein p fleet

Commodities May Be Turning the Recovery Curve

The rebound in the BDI is coming off very low levels. Even though it's making it's way to 2000 in a relatively determined manner, it's still a long way from where it was in the middle of 2008. I bought and traded several of the names off the bottom and have continued to trade core positions, especially as the dividends are cut.

I sold ANR, but kept a larger position in WLT which just raised it's dividend.

Hard to ride them in this market, so I'm looking for channels and churning patterns where I can find them.

The Real Reasons Fertilizer Stocks Are In the Dirt

If SB Tiger is right, then the miner's strike at POT wouldn't be a problem. The fact is that the strike is creating a shortage causing deliveries of potash to be rationed and delayed until early 2009. MOS confirmed that potash demand was robust and there was pricing power due to short supply. That doesn't sound like a bubble bursting to me.

Carl Martin had it right --- there are more than five reasons that are driving stocks down and none of them have to do with the underlying fundamentals. Since when is a stock like MOS that makes 1.3B dollars, grows at over 300%, and trades at a forward PE of 2.5 a "momentum" play? Value and growth are not easy to find --- and no one seems to care given that they market is being driven by emotion and capital preservation.

I'm not smart enough to call a bottom to the market, but I spot a bargain. Get ready for major stock repurchases, increased dividends, and a lot of M&A activity. The market is creating some great buying opportunities.

The Real Reasons Fertilizer Stocks Are In the Dirt

There are so many factors at play, it makes your head spin.

Many people are comparing the "commodity" bubble to the dot com bubble. Frankly, I don't see the comparison at all. MOS may have missed, but they still made 1.2B for the quarter and trades at a forward PE of just over 2. How does one compare that to dot com companies that made little or no money and or were trading at triple digit multiples?

The build up in inventory shouldn't be a surprise considering the current credit situation. Farmers need credit to purchase seed, fertilizer, and equipment. Purchases have been delayed. Unfortunately, it's the height of planting season. I would be more inclined to worry about food shortages, than the price of MOS --- which is ridiculously cheap, along with the rest of the group.

In regard to more supply coming on line, I have a couple of thoughts. Firstly, if the business is so bad why would companies like Rio Tinto or BHP Billiton want to get in at the top? To the contrary, I would not be surprised to see BHP make a bid for one or more of these companies instead at current levels. POT is buying back a great deal of their own stock, which they considered extremely undervalued.

Once the hedge funds are done selling, credit returns to normal, and the market looks at the fundamentals, I'm sure that Mr. Mickey is right. When that will be, however, no one knows. I've been wrong on POT and MOS for 40 points each. Ouch!