Ouch. The short we put on Mosaic (MOS) yesterday will be stopped out first thing this morning at the open $48.65 as reports from what appears to be a Brazilian newspaper speak of a potential buyout by Vale (VALE). The irony is Mosaic has been in play for the past 12 months due to the larger ownership stake by Cargill... many have speculated Cargill would take back the entire company.
- Mosaic Co., which is majority owned by Cargill Inc., surged 9.8 percent to $48.90 as O Estadao de S. Paulo reported Vale SA, Brazil’s largest mining company, is considering bidding for the North American fertilizer producer in a deal valued at $25 billion, without saying where it got the information.
From a strategic standpoint I love this move for Vale; potash is one of the rare commodities that has an incredibly wide moat and controlled by very few names worldwide. But really did the news have to come out today? With today's 9.5% move in the stock, Mosaic is only valued at $20B, so either some investors don't believe in the report or the valuation of $25B is incorrect.
p.s. recall reports last week of a flurry of call buying in Mosaic (MOS) on takeover rumors - right before the news of a very low price for potash sales to India sunk the potash producers? This time the rumor mongers were correct - but Mosaic has surged on "call buying" ahead of "takeover rumors" about once every 90 days for more than a year now, so it was hard to take it seriously this time around.
Either way, we're out and will suffer a 10% loss on this 3.5% stake; our stop was $46.55 and Mosaic gapped up to a $48.65 open. It happens. I think our first real whiff in 4 weeks, so probability was high something would go awry randomly.
No position
Did you like this article?
's
