donzelion

Seeds of Growth for Monsanto

I like Monsanto's model quite a bit: farmers have an option of natural seeds or modified seeds, as they have for millennia, but if they pay extra, they get extra benefit (and when farm sizes and water rights limit capacity, extra yield any way you get it can be worth it).

However, I'm confident that many players can find niches in agriculture, and I'm confident that the basic risks of boom/busts won't change. Hence, I'll stick with ETFs: MOO and DBA are the new classic plays, but PAGG is a promising MOO alternative (it's very narrowly traded and newer, but I like the slightly broader international diversification).

Fertile Territory: Three Well-Run Operations

In the 1980s, taking on a heavy debt load was a preferred tactic to evade a hostile takeover. Mid-size companies paid an obscene premium to buy out rivals because the debt itself was a good thing, whether the acquisition worked out or not (most didn't work out so well). Shareholders didn't complain when dividends stagnated as a result of funds being diverted to pay off debt loads - after all, "growth was hip" for a few decades there.

This three way race smells somewhat similar to the early 80s environment, but the strategy may no longer be viable. Some consolidation makes sense, but I'll wait to put my money into any of these equities after the shakeouts are over. We can't know if managers are struggling to hold onto their jobs, rather than to return shareholder value, until after the dust clears.