TKO

Is Potash Corp. Overpriced?

Reasons why you should sell:
- Lowered current demand due to Global Recession

Reasons why you should buy:
- China's commitment to urbanization -- less farmers, more manufacturing/service based (Pressure on farmers that remain to be more efficient)
- The requirement of subsidies around the world to provide farmers an incentive to produce (Current food prices are too low)
- Fertilizer prices are holding their own versus many other cyclical commodities like oil, metal prices, gas, etc.

Conclusion:
If you are shorting a fertilizer company now, you are shorting all of these expectations that are already built into the share price. If the world tips over from here, stock piling food will be next. If it moves up from here, you eliminate the most important reason to short while all of the long reasons remain.

Disclosure: I am long AGU at $29 on TSX.