Hitting The Century (VIII – Agriculture)

Tags

agri-business, agriculture, Aqua Bounty Technologies, aquaculture, Asian Citrus Holdings, Avangardco, Black Earth Farming, Cal-Maine Foods, Canada, chickens, Cresud, eggs, ETFs, farmland, fish, forestry, free cash flow, inflation, livestock, plantations, portfolio allocation, real assets, Russia, timber, Ukraine

Continued from here. This series fell by the wayside since September, as I focused on a flurry of posts covering performance, a little shareholder activism, and some pretty exciting new stock buys/write-ups. Oh, and some bubble bursting..! 😉 As a reminder: i) Asset allocation plays a far greater role in returns than perhaps we like to think – in this series I thought I’d try illuminate some of the logic behind my own portfolio allocation & stock selection, rather than individual stock picks, and ii) this portfolio allocation pie-chart might prove handy:

The prior Century post & Inflation post are v relevant too: They highlight why I believe inflation won’t prove an issue in the near/medium term, and how to prioritize the choice of real assets (property, natural resources, agri) as inflation pure plays. My expectation of delayed inflation, despite QE Infinity, has choked back my real asset allocation. Also, I consider many of my real asset holdings more special situations, than inflation plays.

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Nope, Not Going Any Further with that Drag Queen..!

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agri-business, Argentina, Boy's Own, CDS spreads, Cresud, Cristina Kirchner, drag queens, Falkland Islands, farmland, intrinsic value, Margin of Safety, nationalization, Repsol YPF, Sell in May, spring cleaning, Trinity Biotech, YPF

Remember that twisted Boy’s Own holiday you took with your mates a couple of years back? You know the one, when you ended up in that very dodgy club? Yes, yes, I know it’s all a little hazy. I mean the club where the performers turned out to have a little extra..?!

Remember that blonde & the brunette?! No, not like that, I really think it was more like this. Ah yes, it’s all coming back to you now… So, do you remember when that drag queen sat in your lap, wriggled and muttered something dirty to you? And you were terrified…but strangely aroused also? Yes, shameful, I know – now stop dreaming about it.

Avangardco – Eggsotic But Eggcellent!

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agri-business, Avangardco, Baker's Dozen, Big Bird, Black Earth region, Cal-Maine Foods, Cherkizovo, Cresud, eggs, Eurobond, hryvnia, MHP, Oleg Bakhmatyuk, Sprott Resource Corp, Ukraine, Ukrlandfarming

Avangardco (AVGR:LN)

I’ve recommended Avangardco in my Baker’s Dozen for 2012, but with their recent results and share price acceleration it’s time for a complete write-up. My Black Earth articles, here and here, are helpful background also. This Black Earth interest came about when I began i) seeking agricultural plays on the increasing global demand for protein as living standards improve around the world, which evolved into ii) identifying the most fertile farmland, generally accepted to be the Black Earth region of Ukraine & Russia and the Pampas of Argentina (followed by the Canadian Prairies), and iii) finding the cheapest (but acceptably fertile) farmland globally.

I was delighted to discover the most fertile farmland coincided with some of the cheapest farmland globally, a happy accident of history! I discarded Canada due to its higher cost (and the only farmland opp. I found was Sprott Resource Corp (SCP:CN), which is more of a commodity play). In Argentina, however, I discovered the perfect farmland (and property) company to invest in! Please read here, I now have a 2.8% portfolio stake in Cresud (CRESY:US). This left me with Russia & Ukraine: Farmland companies here have v large (and cheap) land holdings, but suffer from negative cashflows and the obvious need to raise cash from investors…

Happy New Year! – A (Baker’s) Dozen for 2012

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Argo Group, Asta Funding, Avangardco, Colony Financial, Cresud, Dhir India, EIIB, FBD Holdings, Livermore Investments, pdosullivan, Petroneft Resources, Sirius Real Estate, Total Produce, Trinity Biotech, Vietnam Opportunity Fund

Philip O’Sullivan kicked us all off here with his list of picks for 2012, and so far I’ve seen John Kingham and Mark Carter join in with their contributions here. Note John can only win half of the (non-existent!) prize since he came up with 2 lists…

I struggled with the idea a little myself – I’d far prefer to write 1,200 words about 1 stock than to write 1 list, haha! I also dread seeing shoot-for-the-moon lists (congrats so far, chaps) stuffed full of triple leverage ETFs and penny dreadfuls – not much use to any of us in the real world.

2011 Stock Recommendations & Performance

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Argo Group, Asta Funding, Colony Financial, Cresud, Dhir India, EIIB, Fair Value, portfolio performance, purchasing power, Sirius Real Estate, Total Produce, Trinity Biotech

I’m sure you’ve noticed I’m not shy about setting Fair Value Price Targets for recommended stocks. I don’t see a lot of people out there doing this – pretty obvious why…I’m sure someone will be sure to point out how precisely wrong I’ve been when I come up with a few duds! Ouch!

But, in an ideal world, the best way I’d evaluate any recommendation from a website or blog is to know the writer’s price target and portfolio stake. Ownership demonstrates their conviction, the size of their stake confirms the strength of this conviction, and their price target allows the reader to perform their own risk/reward evaluation. What are your own thoughts? Do you agree whole-heartedly, partially, or do you think this approach is a danger or a hindrance in some way?

Farming, Back in the USSR

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Alpcot Agro, Black Earth Farming, Black Earth region, Continental Farmers Group, Cresud, farmland, Market Cap/hectare, Trigon Agri

Today, with some regret, I let go of one of the agricultural plays in my portfolio.

I wrote in a recent article about ‘…the increasing global demand for protein as living standards improve around the world…’. This prompted me to identify farmland as perhaps the purest investment opportunity to exploit this trend. Imagine my delight on discovering the most fertile farmland in the world coincided with some of the cheapest (productive) farmland globally. I highlighted the Black Earth region of Ukraine & Russia as one of the best farmland opportunities, and promised to write about it at a later date.

Pleased to Report!

Tags

Cresud, MarketFolly, Seeking Alpha, Wordpress

I’m pleased to report I’ve just received a ‘gold star’ from Seeking Alpha!

How come I never got any of those as a kid? All I ever got was regular belts of the ruler… Hmm, who’s getting the most out of this – that SA logo’s pretty big!

Once I began this blog, my intention was to also contribute (at least for US listed stocks) and link my blog to Seeking Alpha. I thought a condensation of my recent Cresud (CRESY:US) posts (I don’t think they’re into Irish farmland commentary) would be a good place to start – here’s the article. It actually survived the SA editors relatively unscathed, although they dumped the new title I’d dreamed up: “Cresud – Pretty Pampas Play!“. Surely that’s the kind of title the meedjya love..?

Cresud (CRESY:US), Part II

Tags

Argentina, BrasilAgro, Cresud, Debt/Assets Ratio, Elsztain, farmland, IRSA, Margin of Safety, Owner-Operator, Price/Book, value investing

Cresud (CRESY:US)

Mkt Price:  USD 11.30

Mkt Cap:  USD 561.1 mio

Debt/Assets %:  12.7%

P/B:  0.35  (adjusted)

Fair Value:  USD 32.66

Upside Potential:  189%

Continuing from my previous Cresud post:  CRESY has a tough B/S to tackle. First, it’s denominated in Argentinean Peso (4.2620 ARS per USD), a fairly stable…but potentially very unstable currency, second, it wildly understates many assets which are carried at cost, and third, it consolidates listed entities (IRSA (IRSA:AR), and also BrasilAgro (AGRO3:BZ) going forward) in which Cresud has a controlling and/or majority stake. My approach to dealing with this is to construct a B/S and Fair Value on a ‘look-through’ basis. There are a number of components to work through:

Cresud (CRESY:US) & Irish Farmland

Tags

Argentina, BrasilAgro, Cresud, farmland, Ireland, IRSA, pampas

Cresud (CRESY:US)

Mkt Price:  USD 11.28

Mkt Cap:  USD 560.1 mio

Cresud is a leading Argentine agricultural company engaged in the production of basic agricultural commodities. It also has a growing presence in the Brazilian agricultural sector through its investment in BrasilAgro (AGRO3:BZ). Cresud is currently involved in a range of activities including crop production, beef cattle raising and milk production. The Company’s business model, which it seeks to roll out abroad, taking into account the specific conditions of each country, focuses on the acquisition, development and exploitation of properties having attractive prospects for agricultural production and/or value appreciation and the selective disposition of such properties where appreciation has been realized. Additionally, a majority of Cresud’s current market value is actually represented by the quoted value of its controlling stake in IRSA (IRSA:AR), Argentina’s leading listed real estate company. Cresud’s shares are listed on the Buenos Aires Stock Exchange and its ADSs are listed on NASDAQ.