Note: All financial figures are in U.S. dollars unless otherwise indicated.
I look for thematic investment opportunities supported by positive secular trends. A secular trend is distinctly different from the cyclical trends that can influence financial markets in a much more transitory fashion. Secular trends are long term in nature. They can run for years or even decades, triggering fundamental shifts that are important for investors to identify.
Unlike cyclical trends, they can operate independently of the financial markets and can be highly disruptive, dramatically changing the landscape of a particular industry. These characteristics can make them a powerful tailwind for companies that are positioned to benefit from them, particularly because they are typically less affected by shorter-term market or economic gyrations.
Continued global population growth and, in emerging markets, a growing middle-class with changing diets, is spurring the demand for increased food production. According to the United Nations, the current world population of 7.4 billion is expected to reach 8.5 billion by 2030, 10.0 billion in 2050 and 11.5 billion in 2100.
To meet the needs of this growing population, with its changing diets, food production will have to double in 30 years to help solve the current food crisis. This increased food production will have to occur on less available arable land. The world has lost a third of its arable land due to erosion or pollution in the past 40 years, with potentially disastrous consequences as global demand for food soars.
The steep decline in arable soil has occurred at a time when the world's demand for food is rapidly increasing. It is estimated the world will need to grow 50% more food by 2050 to feed the anticipated population of 10 billion people. Nutrien's (NYSE:NTR) grower customers will face continued pressure to produce more and better quality food on limited arable land, while minimizing impacts on the environment. Each and every day, farmers across the globe are challenged to produce more nutritious food, and to do so in a manner that sustains the world's finite resources.
This can only be accomplished by intensifying production. Simply stated, the world will not be able to meet its food production goals without fertilizer. Today, commercial fertilizer is responsible for delivering 60% of the world's food production.
The investment thesis for Nutrien Ltd. is simple, solid and straightforward. It can be summarized in four words: "Feeding a growing world." The company offers investors exposure to the growing global demand for agricultural products. Nutrien is the largest crop nutrient company in the world. It effectively leverages its world-class assets with its retail distribution network to bring nutrients to market efficiently.
Source: Nutrien 2018 Annual Report
Nutrien is the result of the mega-merger in 2018 between Agrium and PotashCorp, following a major fertilizer market correction brought on by years of unchecked supply expansion and the dissolution of a major potash cartel in Eastern Europe in 2013. Today, more than a half decade later, markets are finally beginning to rebalance. A combination of rising selling prices, cost savings from the merger, and a significantly increased global footprint have Nutrien on solid financial footing today.
Nutrien is the world's single-largest provider of crop inputs and services. It is also the world's largest fertilizer producer by capacity. And Nutrien has built the most diverse, vertically integrated agricultural input business. And it is a strong and steady cash generator.
As synergies from the merger continue to be realized, Nutrien's more flexible balance sheet and lower leverage ratios, strong credit ratings and incremental cash flows will be able to further accelerate its Retail M&A strategy. And there is a good and growing selection of consolidation opportunities in the North American retail sector. As agriculture fundamentals remain challenging, there is opportunity to acquire retail assets at or near the bottom. And with the acquired businesses vertically integrated with Nutrien's wholesale business, there is good potential to increase overall crop nutrient sales volumes.
Nutrien NYSE share-price performance since its first day of trading on the NYSE on January 2, 2018
Nutrien produces the three main crop nutrients - nitrogen, potash, and phosphate - although the company's main focus is potash, where it is the global leader in installed capacity with roughly 20% global market share. The company is also the largest agricultural retailer in North America, selling fertilizers, crop chemicals, and seed directly to farm customers. Nutrien produces and distributes over 27 million tonnes of potash, nitrogen and phosphate products for agricultural, industrial and feed customers world-wide. (A "tonne" is an alternative spelling to "ton," used to describe a metric ton, which equals 1,000 kilograms or 2,205 pounds.)
Since the merger, Nutrien has increased its asset utilization rates across the board because it now has more products for its retail network, which has contributed to reducing overall production and delivered logistics costs. In addition, the company increased total fertilizers' sales by almost one million tonnes last year alone, and it still hasn't fully optimized operations yet. Nutrien is seeing logistics cost savings of $12 to $14 a tonne on Nutrien-supplied crop nutrients to retail. This is a significant advantage in any commodity business and it is one of the reasons why the company was able to exceed its merger synergy targets.
The combined company is the world's largest potash producer and third-largest nitrogen producer. The scale of its crop nutrient business provides opportunities to further reduce operating costs and grow sales volumes as global demand rises. Nutrien also operates one of the world's leading agricultural retail distribution networks, comprising over 1700 retail locations in seven countries throughout the U.S., Canada, Australia and South America. Its retail business offers a stable earnings base and an abundance of acquisition and organic growth opportunities.
Nutrien's production includes 22 million tonnes per year of potash capacity in Canada alone - the largest volume globally - while Nutrien's nitrogen contribution makes the firm the world's third-largest nitrogen fertilizer producer globally, with sales of more than 11 million tonnes of product annually.
Almost 18 months after the merger, Nutrien has found its feet. Nutrien began operations on January 2, 2018 with a total of 20,000 employees - 4,500 based in Canada's sparsely populated Saskatchewan province. Nutrien is the best-positioned company in the agriculture sector because of its pivotal position in the agriculture value chain and its integrated business model, starting with Nutrien's direct connection to the farmer.
Nutrien Retail provides an important source of diversification for the fertilizer producer, as well as a test-bed and launchpad for innovative new products. For example, Nutrien launched a digital agriculture platform in April 2018 to help farmers better manage the timing of planting, fertilizer and pesticide application, and harvest with current and historical data on weather and climate.
Its Nutrien's people and equipment that are on the farms, providing independent crop advice and full agronomic solutions that gives the company strategic leverage - Nutrien has more data, insight and perspective on what farmers need to grow a crop. And Nutrien also has the supply chain capability to bring products, services and technology to the farm quickly and at a lower cost than anyone else.
Nutrien is both integrated and diversified - creating a one-stop shop. This provides it with significant leverage to improving agriculture fundamentals, but also greater stability and resilience when its markets turn down. And when they do turn down, Nutrien will have the capital to allocate to creating value.
The benefits of Nutrien's integrated business model are both operational and financial. Fertilizer integration is important because transporting commodities is expensive. So keeping Nutrien closer to its production facilities brings significant value. But integration goes beyond crop input products and retail; it also includes Nutrien's Loveland proprietary products business.
Loveland is a business with over $2 billion in revenue and over 300 products, with 12 manufacturing facilities around the world, fully integrated with Nutrien's retail network to ensure optimal value creation. All of these businesses share logistics providers, warehouses and distribution infrastructure to be more efficient and with lower costs in serving Nutrien's customers.
Source: Nutrien investor presentation
The merger of PotashCorp and Agrium was first announced in September 2016, after being unanimously approved by the boards of both companies, promising an enterprise value of some $40.5 billion. Thereafter followed a long, difficult path of regulatory review and approval, with both companies lobbying the governments of Brazil, Russia, the U.S., China and India to approve the "merger of equals." The U.S. government was the last to sign-off on the deal in late December 2017.
Agrium was left largely untouched throughout the process. But PotashCorp was required to divest its minority stakes in competing potash producers SQM (SQM), Arab Potash (OTC:ABPTY), and Israel Chemicals (ICL). It completed the necessary divestments, capturing $5.3 billion of net proceeds - above what most people thought it could deliver - although the cash generated by the sale of its stake in Chile's SQM was delayed by a legal spat, and subsequent mud-slinging.
Speaking at an announcement ceremony on January 2, 2018 confirming the successful merger, Chuck Magro, former President and CEO of Agrium, and new head of Nutrien, stated:
Our company will have an unmatched capability to respond to customer and market opportunities, focusing on innovation and growth across our retail and crop nutrient businesses. Importantly, we intend to draw upon the depth of our combined talent and best practices to build a new company that is stronger and better equipped to create value for all our stakeholders.
At the time, Mr. Magro added that Nutrien expected to achieve synergy savings of approximately $250 million by the end of 2018, with full synergies of $500 million to be achieved by the end of 2019. Although that promise appeared somewhat bombastic at the time, Mr. Magro's claim of $500 million in cost savings was to be achieved and surpassed. Nutrien attained $621 million of run-rate synergies - 24% above the initial two-year target of $500 million it originally committed to - and it accomplished this within 15 months of the merger, not the 24 months first cited.
Despite some initial jitters in its first quarter as a combined company, which ended March 31, 2018, when Nutrien reported a net loss of $1 million - to be expected, considering the size of the new-born enterprise, and the necessity to merge two sets of executive teams, offices, and logistics operations - the company managed to wrestle its fortunes into a stronger position, reporting net earnings of $741 million in its fiscal second quarter of 2018.
Nutrien is a diversified global leader in agricultural products and services, with revenue of $19.6 billion in its first full year in 2018. The company is diversified geographically as well as through its business model, as it operates through two complementary business units - Retail and Wholesale. This is a unique competitive advantage for Nutrien. None of its fertilizer competitors has a retail business.
While the majority of Nutrien's production is used for agricultural purposes, about 15% goes to industrial applications. The bulk of Nutrien's wholesale industrial sales volume comes from ammonium nitrate, ammonium sulfate, ammonia, phosphoric acid, nitric acid and urea, produced at its North American nitrogen facilities and sold in Canada and the U.S. Urea, for example, is used for the production of resins in the construction industry and potash for the recycling of aluminum.
Nutrien's competitive advantages are anchored by its unique business model, combining primary fertilizer production and manufacturing together with the world's largest direct-to-grower distribution network. This unique business combination enables the company to achieve higher plant operating rates, leverage its size and scale with suppliers, achieve significant logistics and distribution synergies and gather detailed market intelligence globally from all levels of the crop-input chain. In addition, because Nutrien is the largest agricultural retailer in the world, its retail segment has significant purchasing power.
Already low by historical standards, U.S. crop prices - soybeans in particular - came under additional pressure in 2018 and have remained weaker since then as a result of various factors, including global trade issues and favorable U.S. crop conditions. Despite weaker U.S. crop prices, Nutrien has continued to deliver relatively strong Retail segment performance.
Looking forward, there is reason for optimism with respect to crop prices. Notably, U.S. corn inventories are forecast to reach their lowest levels since 2013, while global grain inventories are expected to fall to their lowest levels since 2012. It is also worth noting that U.S. farmers have shifted toward more corn acreage in 2019 versus soybean acreage, given current crop prices. Such a shift benefits crop input providers like Nutrien, as corn drives a comparatively higher level of per acre spend by farmers.
Positive potash-market sentiment witnessed during 2018 reflected strong demand across many major markets and tighter-than-expected supply - driven in part by limited saleable production from new mines. Demand remains strong in 2019. Notwithstanding the fact that 2018 represented a record year in terms of global potash shipments, Nutrien management indicated that it expects global potash demand to increase once again in 2019. Nutrien forecasts 66 million to 67 million tonnes this year, up approximately 3% to 5% year over year.
Canpotex - short for Canadian Potash Exporters - is the Canadian potash exporting and marketing firm, incorporated in 1970 and operating since 1972. Based in Saskatchewan, Canpotex manages the entire Saskatchewan potash exporting industry, including transportation and delivery. It is worth noting that Canpotex announced in late 2018 that, because of continued strong potash demand and solid agricultural fundamentals, it is fully committed on potash sales through 2019.
The global crop input market should continue to tighten going forward, with the pace of new capacity additions expected to slow significantly after 2019. The shift toward increased corn acreage in both North and South America is also expected to help support nitrogen demand and prices.
The U.S. is the third-largest consumer of crop nutrients and second-largest importer. With its production and sales channels, Nutrien is positioned to benefit from this demand. Nutrien Retail operates in Canada and in 45 states across the U.S., while expanding in Brazil and Australia.
Nutrien began to include its adjusted EBITDA figure in its financial results since the merger. In 2017, the pro forma combined EBITDA of Potash Corporation and Agrium Inc. was $3 billion. In 2018, the first year of Nutrien, the company delivered $3.9 billion through a combination of synergies, growth and improving market fundamentals. For 2019, the midpoint of Nutrien's adjusted EBITDA guidance is $4.6 billion - a 53% increase in EBITDA since the merger, reflecting the strength of the business model and the company's stellar execution on its strategy.
First Quarter 2019 Results
Nutrien's fiscal first quarter 2019 financial results were impacted by harsh, wet weather conditions; nevertheless, the company maintained its guidance for the full year when it report Q1 2019 results on May 9, 2019. First quarter 2019 adjusted EBITDA was 22% higher than for the corresponding period in 2018, despite being impacted by the second wettest six-month period in the United States in 125 years.
Commenting on the fiscal first quarter, Nutrien CEO Chuck Magro stated:
We allocated almost $1 billion towards growing our Retail business in core markets and repurchased over $800 million of our stock. We also continue to pursue operational enhancements across our world-class integrated network and to lead the way in digital transformation of the ag-retail industry.
Retail EBITDA in the first quarter was lower compared to the same period last year due to an extremely wet spring season and flooding in parts of the U.S. However, Nutrien continued to advance its "Ag Solutions" digital platform, with customers representing 58% of its North American Retail sales signed up on the platform within nine months of launch.
Potash EBITDA was 41% higher in the first quarter compared to the same period last year due to higher selling prices and strong offshore demand, partially offset by lower North American sales. Nitrogen EBITDA in the first quarter was slightly higher than the same period last year due mainly to higher urea and urea ammonium nitrate (UAN) prices being offset by lower total sales volumes resulting from the excessive wet weather across the U.S.
Nutrien strengthened its Retail business through the first quarter with three new tuck-in acquisitions and closed on its Agrichem acquisition in Brazil, with combined annual revenue of approximately $400 million for these businesses. It also entered into a binding agreement to acquire Ruralco Holdings Limited, the third largest agriculture retailer in Australia.
Also in the first quarter, Nutrien announced an additional 5% share buyback program. To date, it has repurchased approximately 21 million shares, representing over 3% of Nutrien's outstanding shares.
Nutrien maintained its guidance for full-year 2019 guidance for adjusted net earnings per share (EPS) at $2.80 to $3.20 per share, and adjusted EBITDA at $4.4 billion to $4.9 billion. First-half 2019 guidance is $1.75 to $1.95 adjusted net earnings per share.
Nutrien continues to deliver growth in the base business through retail acquisitions and record nitrogen and potash sales volumes. At the same time, it continues to effectively allocate capital, funding accretive retail M&A transactions that further consolidated its core markets while bringing value to customers. The company returned more capital via dividends and buybacks than any of its peers and strengthened its balance sheet to be ready for future opportunities.
Nutrien expects to achieve a solid year in 2019, including a solid first-half of the year, with no change to the guidance it provided at the beginning of the year. However, some earnings could move from the second quarter to the third quarter, particularly in Retail because of the late planting season.
Nutrien continues to deliver growth in the base business through retail acquisitions, and record nitrogen and potash sales volumes. At the same time, it continues to effectively allocate capital, funding accretive retail acquisitions that consolidate its core markets, while delivering value to its farmer customers.
Nutrien is also evaluating whether to expand its annual potash production capacity by five million tonnes after 2023, around the time that metals miner BHP Billiton (NYSE:BHP) is considering a move into potash. The additional capacity would come from expansions to existing Canadian mines over the next decade. Nutrien currently has some five million tonnes of idled potash capacity due to soft prices in recent years. Its existing mines could put that idled capacity back into service by 2023, taking its operational capability to 18 million tonnes. The company could then begin adding a further five million tonnes subsequently.
A spike in potash prices a decade ago kicked off a global expansion in production of the crop nutrient, particularly by Nutrien's predecessor company, Potash Corp. Excessive capacity resulted in weakened prices and has led several producers to slow output. However, global demand for potash has been rising steadily more recently, particularly in Asia and Brazil.
Nutrien also announced that it is raising its quarterly dividend by 4.7%, starting with its payment to shareholders of record at the end of the third quarter. The company will pay a quarterly dividend of $0.45 per share, up from $0.43.
Nutrien is the best positioned company in the agriculture sector. It has a well integrated business model, starting with its direct connection to the farmer, providing independent crop advice and full agronomic solutions to the farmer. Through this close association, Nutrien has built up an extensive first-hand catalogue of data, knowledge and insights on what farmers need and will need to grow a particular crop. And the company has the supply chain capability to bring products, services and technology to the farm quickly and at a lower cost than anyone else.
The company has a clear path to earnings growth from both its retail and wholesale businesses, which will translate into robust and rising cash flows, with lower volatility than its peers. Nutrien's free cash flow (FCF) should continue to grow smartly through 2019 and beyond, resulting in the company returning significant amounts of cash to shareholders through a combination of capital appreciation, share repurchases and dividend increases.
Source: Nutrien investor presentation
Nutrien is both integrated and diversified. It is a one-stop shop. This allows it to have significant leverage to improving agriculture fundamentals, but be more stable and resilient when the markets turn down. And when the markets do turn down, Nutrien has the capital to allocate to create additional value.
Nutrien has created a leading integrated platform that has unique competitive advantages and it has a focused strategy to deliver shareholder value through the cycle.
After the Ruralco transaction in Australia is complete and as Nutrien continues to grow its South American business, its earnings and cash in retail will continue to diversify and smooth out, which will contribute to further de-risking its business. And as Nutrien's platform and presence continue to grow, it can send potash and nitrogen to different parts of its network to take advantage of seasonal premiums in the different geographic markets, thus improving its overall margins, reducing its volatility and risk, and smoothing its overall earnings and cash flows.
Nutrien returned $2.8 billion to shareholders in 2018 through dividends paid and share repurchases, while continuing to invest in growth and maintaining a strong investment-grade credit rating. With its unique competitive position and strategy, steadily growing cash flow and strong balance sheet, Nutrien is well positioned to provide shareholders with a superior long-term returns.
Nutrien's strong free cash flow generation potential and the considerable financial flexibility that the company enjoys now that it has completed the required sale of key equity investments-generating over $5 billion of proceeds-are highly attractive qualities. This affords management the opportunity to both grow the business and return capital to shareholders through various means.
The outlook for the potash and nitrogen markets is favorable over the next several years. The company's valuation as attractive. Nutrien currently trades at 7.3x analysts' 2019 consensus EV/EBITDA estimate, which is more than 20% below the 9.5x EV/FTM EBITDA multiple that Nutrien's predecessor companies traded at, on average, during the 10-year period prior to the merger.
Source: Nutrien investor presentation
In particular, I am encouraged by the five-year EBITDA objectives presented by management. Nutrien indicated that by 2023, it aims to grow its adjusted EBITDA to between $6.2 billion and $6.9 billion, almost 70% higher than its $3.9 billion figure in 2018-representing very healthy growth potential. A reasonable share of this expected growth can be realized by factors that management has control over; for example, M&A growth and further efficiencies and cost savings.
Source: Nutrien investor presentation
The company's recent Investor Day on May 28th focused on Nutrien's medium-to-long term outlook and opportunities, Nutrien reconfirmed its 2019 financial guidance ranges. However, management did acknowledge that weather conditions have remained challenging in certain parts of the U.S. Furthermore, management noted that, if there were to be a significant acreage shift from corn to soybeans, or if a significant amount of acreage goes unplanted, the company would expect to trend to the bottom end of its first half 2019 EPS guidance range of $1.75 to $1.95.
Regarding Nutrien's overall business strategy and capital allocation priorities, there were no surprising elements in the information presented by management. Strategically, Nutrien aims to continue to grow its retail business through acquisitions and organic initiatives.
Meanwhile, within Nutrien's crop input segments, management is focused on network optimization and satisfying expanding market demand through lower-cost/lower-risk production growth. Regarding capital allocation, management plans to maintain its balanced approach of investing in the business and returning capital to shareholders. Although the challenging weather conditions have somewhat clouded Nutrien's near-term outlook, I remain positive on the medium to long-term outlook. I like Nutrien's strong free cash flow potential, financial flexibility and long-term earnings growth potential.
As Baron Rothschild opined, the key to making money is to "Buy when there is blood in the streets." Markets reward timing, patience and sometimes a contrarian view. The way to get it right is to carefully build a position in strong companies in strong sectors.
While we may see continued pressure on fertilizer stocks in the short term, I believe the long-term fundamentals are highly favorable, driven by strong, lasting sectoral tailwinds. Being early can not only be rewarding, but also puts us in a good position to understand and take advantage of a sectoral trend and subsequent move.
Despite the recent volatility in the fertilizer market, I expect demand over the long term to remain strong. In addition to population growth, economic growth in many developing countries has resulted in improved nutrition and human diets are shifting from low-protein, starch-based foods to more animal-based protein. The developing world still lags behind the developed world in meat consumption, but citizens of these countries are making the shift towards consuming more meat.
Commercial fertilizer is necessary to maintain global crop productivity at current levels and will be even more crucial if yields are to increase. In many countries, fertilization is inadequate and unbalanced, which negatively impacts both crop yield and crop quality.
Even if the biotechnology industry can deliver on its promise to contribute to increased crop yields, fertilizer is still critical to avoid degradation of soil nutrients and soil quality. Moreover, Nutrien already has 200 R&D employees working directly in innovation functions in biotech R&D. Half of the members of Nutrien's Innovation group work strictly on the science side - all of them have master's degrees or PhDs. The company also owns a 25% stake in CH Biotech in Taiwan, which specializes in plant health and nutrition technologies, a 70% stake in Agricen and a 30% stake in its sister company Agricen Sciences, both of which develop industry-leading biological technologies. That's a lot of brain power being harnessed.
As the largest global producer and distributor of fertilizer, Nutrien produces and distributes over 25 million tonnes of potash, nitrogen and phosphate products to help growers worldwide increase the quality and quantity of their crops to feed the world. Combined with its leading agriculture retail network that services over 500,000 growers worldwide, it is well positioned to create value for its stakeholders.
Nutrien's business model is strengthened and the risk mitigated through the company's broad geographic footprint, diversified portfolio of inputs for a wide variety of crops and continued proprietary product growth. And because Nutrien operates in both the wholesale and retail sectors of the global fertilizer industry, this gives it a broader, more diversified business model than its peers.
Nutrien's retail business is a "stable gem," delivering consistent performance, which enhances the resilience of Nutrien's overall business model. Not only is it less volatile than the wholesale side, which is more exposed to commodity price cycles, but it also serves as a proprietary channel for the sale of seed and crop protection products to a global network of farmers. The integrated structure makes the overall business less volatile and represents a competitive advantage compared to the pure-play wholesale producers.
The strength of Nutrien's retail segment is in its countercyclical cash flow generation and stability in earnings as well as the enhanced acquisition profile it presents - Nutrien can pick off retail acquisition targets in bite-sized chunks. The company plans to continue to expand its high-margin proprietary brand offerings and continue acquisitions to increase its retail distribution footprint. I expect Nutrien to continue to grow its retail segment operations through small tuck-in and bolt-on acquisitions.
Nutrien is my favored name in the fertilizer sector for its competitive advantages stemming from its unique wholesale-retail business model; its low-cost production, global reach, strong cash generation and steady growth profile. Although I expect agriculture market conditions to remain choppy, the retail segment's strong, sustainable cash-flow generation should help buttress Nutrien.
For the value-oriented, dividend-growth investor with a long investment horizon and specific focus on companies with strong fundamentals, financial metrics and quality values; for example, a broad economic moat, I believe Nutrien is a good investment opportunity at the present time. I see the stock's valuation as attractive and I reiterate my Buy rating with a 12- to 18-month target price of $67.00 per share, which represents 30% upside to Nutrien's closing price of $51.65 on June 7, 2019, plus its safe and growing yield, current at 3.33%.
Demand and prices for agricultural inputs can be volatile as the impacts of weather and global economic factors are hard to predict. These factors can result in lower than expected demand, resulting in a negative impact on earnings.
Potential risks include the health of global agricultural markets and demand and prices for agricultural inputs, which can be volatile as the impact of weather and global economic factors are difficult to predict. These factors can result in lower than expected demand, resulting in a negative impact on earnings.
Other risks include changes to governing import and export regulations, subsidies, tariffs and legislative regimes; foreign exchange rates; shipping and transportation constraints; and permitting and environmental.
Thank you for making it this far in the article. I enjoy researching and writing articles on quality companies for Seeking Alpha. Investing is a hobby of mine, as is writing, and it is rewarding to be able to productively combine the two hobbies.
Successful investing doesn't require sophistication and complexity. All that is necessary is a healthy dose of common sense. Unfortunately, you are not likely to hear this from Wall Street's financial-service firms. Instead, you will likely hear how complicated investing is, and how their advice, their managers, their research, and their expertise are necessary to help you reach your savings goals.
But the irony is that the cost of their services detracts, dollar-for-dollar, from the investment returns that you are seeking to maximize. Before expenses, all investors as a group will earn a return equal to that of the total stock market. As a group, collectively, we are all average. But after the costs of investing (mutual fund fees, trading commissions, sales loads, taxes, etc.) are deducted, all investors as a group will lag behind the market's return by the amount of the expenses they have incurred.
Most of the harm to investors' portfolios comes from their inability to sit still in a room. Our emotions cause us to plunge into stocks at their euphoric highs, and to bail out as they reach depressing lows - precisely the opposite of what the cool logic of common sense would prescribe.
I had a long career in finance and investor relations, which meant I was closely engaged with both sides of the Street - buy-side and sell-side analysts and equity portfolio managers - on a daily basis. I have read thousands of sell-side equities analysts' research reports. Professional fund managers and sell-side analysts are short-term focused. They have been conditioned to be so, as they are measured and rated on a quarterly basis.
My investment horizon is substantially longer. In fact, my ideal holding period is forever. I strive to provide a more detailed, long-term-focused analysis of companies I research.
The true value of my articles stems from the insightful comments from Seeking Alpha members, and I continue to learn from the readers' comments on my articles. Collectively, your comments give me a prized opportunity to tap into the "wisdom of the crowd." Seeking Alpha members' comments continually reinforce for me how investing decisions must revolve around our personal investment and financial goals, which are as unique as we are.
Please share your thoughts in the "Comments" section beneath this article. With so many informed authors and readers, I find I learn as much from the insightful and value-add comments from readers as I do from researching for the article itself.
I recognize that Nutrien may not be for every investor, as each individual investor has their own unique investment and cash flow objectives. To understand why I recommend and continue to own Nutrien and why I consider the shares to be a long-term hold, it is helpful to have knowledge of my investment approach, which can be summarized in four compound words: quality-value, large-cap, dividend-growth, and long-term. For additional details, please refer to an interview conducted by Canada's leading business newspaper, The Report on Business section of The Globe and Mail, entitled "A Long-Term Outlook Helps This Investor Weather Market Volatility."
I focus on companies that fit this four-phrase description. Nutrien fits this mold, and I will continue to hold my full position in it, ideally, "forever."
The focus of my articles for Seeking Alpha is on attractively valued, large-cap, dividend-growth stocks with sound business models, strong management teams and wide economic moats - "Forever Stocks," as I like to call them. I strive to provide an in-depth analysis of the companies I research. I wrote this article from the perspective of a long-term investor who follows a straightforward, four-part strategy:
1. Identify a company with strong competitive advantages.
2. Satisfy myself its competitive advantages are enduring.
3. Invest in this company when it is trading at a fair price.
4. Hold the stock "forever," unless there is a significant change to the fundamental investment thesis associated with the company.
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Disclosure: I am/we are long NTR. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.