Mansij Hans, E.I.T.

The Agriculture Boom Goes Bust

Hello,

While, I think you're discussion of the fundamentals of these companies is impeccable, I worry you may be ignoring the fact that the trading dynamics of these stocks are not only influenced by fundamentals. While these companies are in fact still booming, their stock prices can only sustain 100% growth rates for so long. These stocks(just look at Monsanto) have gone up around one thousand percent since 2002. Their major market drivers - the devaluation of the dollar lead to the heavy buying of their products abroad and increase of oil price which caused farmers to want to use chemical treatments instead of tractors - are now likely to lose steam because of the reinvigoration of the dollar and the decrease in the price of oil. The ag sector is not going to go insolvent, but its growth rate into the future is not simply attractive enough for the use of capital meant for value investing.

Personally, I would consider shorting far out of the money calls for the Jan2010 expiration on price spikes.

As a side note, I am a frequent reader of seeking alpha and think highly of the analysis at this website.