Tuesday, 4 August 2015

Thoughts from Mosaic's always insightful presentation document

I always like the presentation from the potash/phosphates company Mosaic.  Last time I looked at the company I noted that:

'Mosaic is an interesting company but given my already high agriculture-focused shareholdings (Deere, Syngenta, Agco etc) I am going to wait for that c. US$40 level.  Certainly though risk-reward is improving and I am glad I am no longer short (even though it was nicely profitable as a trade)'

You can certainly see the importance of the US$40 level on this 3 year chart:


The numbers today unsurprisingly reflected many of the themes sector peer Potash Corp noted last week (link here) including poor pricing and difficult developed markets.  

Mosaic agreed with the Potash Corp who I observed at the above link that:

'The better news is that China remains 'strong' and they believe there will be a record year of imports.  However note that sequentially 2014-2015 only China and India are expected to see better shipments...but even this was couched a little bit with some acknowledgement of macroeconomic uncertainty'

Hence 'green' traffic lights for India and China but amber/red for the Americas:


Mosaic - as is almost traditional - gave a good insight into farmer nutrient affordability which could be summarised as observing that value is good but can get better.

Mosaic continues to do go work on buying back shares and the 2.4% dividend yield and good balance sheet is useful.  They are certainly more than survivors.  However I am going to wait for that extraordinary opportunity which feels to me more likely to be below that critical US$40/share level.  Maybe in October as per this chart?  On the watch list.  

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