Wednesday, September 11, 2013 3:40:32 PM
MOS a little write up from Forbes...
And we could add one of our most recent picks to that list of laggards as Mosaic MOS -1.43%, the world’s largest integrated producer of phosphate, and the third largest global producer of potash, just became inexpensive enough to justify a purchase. Mosaic endured plenty of downside volatility, plunging by more than 20% in July following an announcement by the CEO of a major Russian potash producer that his company was leaving a decades-old potash cartel and would pursue a volume-based strategy that could damage global potash pricing power industry wide.
While this near-term headwind could be difficult to overcome, we note that these types of spats in cartels often don’t result in anarchy, but instead lead to new agreements that evolve over time. Additionally, we like that Mosaic has a fortress balance sheet that includes $6.25 per share of net cash, and that the firm generates strong free cash flow, giving management operational flexibility to return capital to shareholders via share repurchases and/or dividend increases. We believe that while the operating environment will be challenging over the coming quarters, the firm stands to benefit long-term from the positive global macro agriculture trends. With a very inexpensive valuation after the plunge in the share price and a dividend yield of 2.4%, we welcomed old friend MOS back into Buckingham Portfolio in August.
And we could add one of our most recent picks to that list of laggards as Mosaic MOS -1.43%, the world’s largest integrated producer of phosphate, and the third largest global producer of potash, just became inexpensive enough to justify a purchase. Mosaic endured plenty of downside volatility, plunging by more than 20% in July following an announcement by the CEO of a major Russian potash producer that his company was leaving a decades-old potash cartel and would pursue a volume-based strategy that could damage global potash pricing power industry wide.
While this near-term headwind could be difficult to overcome, we note that these types of spats in cartels often don’t result in anarchy, but instead lead to new agreements that evolve over time. Additionally, we like that Mosaic has a fortress balance sheet that includes $6.25 per share of net cash, and that the firm generates strong free cash flow, giving management operational flexibility to return capital to shareholders via share repurchases and/or dividend increases. We believe that while the operating environment will be challenging over the coming quarters, the firm stands to benefit long-term from the positive global macro agriculture trends. With a very inexpensive valuation after the plunge in the share price and a dividend yield of 2.4%, we welcomed old friend MOS back into Buckingham Portfolio in August.
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