Apparently we are going to return to the stone ages... or at least pre 1840s (or whenever coal became "cool")
Or more realistically hedge funds across America are blowing up and blowing out stock at any price. Mosaic has now given back a year of gains. At some point these fertilizer companies are going to take themselves private and/or a Rio Tinto or Vale would be smart to pick them up.
We continue to layer in - I can't believe 1 week ago I closed 2 coal positions and sold out 99% of JRCC at $36. How quickly things change. Again JRCC is not our favorite but we decided to simply consolidate the "coal" position into 1 stock
JRCC we bought in the $20s
MOS in the $68s
Only 68 more points down for Mosaic before it gets to zero. I think down from 6x earnings to 5, do we hear 4? Looking at their balance sheet last quarter they had $2 Billion in cash/equivalents versus $1.6B in debt - so net $400M. Their cash flow was $1 Billion in 1 quarter alone. With realized prices higher this past quarter than the previous they should generate even more than the $1 B in cash last quarter. This will allow them to reduce their debt significantly and be somewhere around $1.5B cash net of debt. And add at least $1B every quarter after for quite a long time. With a $30B market cap starting in 2009 they should be able to generate $5B in cash a year which in theory means they can buy back 1/6th of the company every year, and by 2015 be private ;)
Added a bit to Potash (POT) as well since I know CEO Doyle is buying back shares and there is one entity worldwide with cash in a creditless world - governments.
The only thing worse than masses of humanity peeved at losing 30,40,50,60% of their investing net worth, is a hungry populace who has lost 30,40,50,60% of their investing net worth. Potash prices have simply not budged one iota in the past 4 months - oh well, darn the logic.
JRCC up to a 3.9% stake
MOS up to a 3.6% stake
POT up to a 2.0% stake
Tomorrow when they are all down 10-20% we'll add another batch. Or I could buy some of these bulletproof (too big to fail) banks at 18-21x earnings I suppose
Long all names mentioned in fund and personal account
Did you like this article?
's
