The world population has grown at a rate of 78 million people per year, and will reach 9 billion by 2050, according to the United Nations. To meet the demand for food, world production must increase by 70 percent. The concern is so pressing that Larry Fink, CEO of $3.5 trillion asset manager BlackRock (BLK, Financial), told the Australian Wall Street Journal in February, “Go long agriculture and water, and go to the beach.”
In a March interview with Bloomberg, Jim Rogers also expressed his bullish sentiments regarding agriculture: “Huge bull market in agriculture,” he said. “Agriculture prices are still extremely depressed on a historic basis. You know, the price of sugar has gone up 600% in the last 6 years, 5 years. It is still 50% below its all time high. 50% below its all time high. The scope for price increases in agriculture is staggering.”
George Soros is echoing their opinions about agriculture stocks – his largest holding is Adecoagro (AGRO, Financial), and he owns a 21% stake in the company. Agriculture and related stocks he and other gurus keep buying are CF Industries Holding Inc. (CF, Financial), Potash (POT, Financial) and Monsanto (MON, Financial).
Adecoagro (AGRO)
Adecoagro S.A. is an agricultural company in South America, with operations in Argentina, Brazil and Uruguay. Adecoagro S.A. has a market cap of $1.48 billion; its shares were traded at around $12.36 with a P/S ratio of 3.5.
George Soros first bought this stock in the first quarter 2011. He bought 27,158,603 shares, making it 5.7% of his portfolio and his largest holding. As of March 31, 2011, Soros is the only guru to own this stock.
Adecoagro is one of the largest producers of food and renewable energy in South America, producing grains, rice, oilseed, dairy products, sugar, ethanol, coffee and cotton. The company only has two quarters of financial results because it just IPO’ed at $11 per share. Its stock has risen 3% since its IPO.
Agecoagro’s 2010 gross sales reached $429.3 million, 35.9% higher than in 2009. Farming production increased 49.1% over the 2009/10 harvest year compared to the 2008/2009 harvest year. Total adjusted EBIT in the company’s farming & land transformation business in 2010 was $60.74 million, versus $46.82 million in 2009, a 29.7% increase.
“Rising standards of living in fast developing economies such as Brazil and China, coupled with ambitious mandates to expand biofuels production, and extreme climate issues in the world’s most productive countries (Australia, Russia, Brazil, Thailand, Argentina, China, etc) have tightened stock-to-use ratios across all agricultural products. Although supply continues to grow, driven by new investments and opening of new areas for agricultural production, it is not being able to keep up with the rapid growth in demand around the globe. This new scenario has caused an upward shift in long term agricultural commodity prices, setting an attractive environment for low cost commodity producers,” the company said in a statement.
GuruFocus discussed this stock in further detail here.
CF Industries Holding Inc. (CF)
CF Industries Holdings Inc. is the holding company for the operations of CF Industries Inc. and is a global leader in fertilizer manufacturing, as well as the second largest nitrogen fertilizer and third largest phosphate fertilizer producer in the world. CF Industries Holding Inc. has a market cap of $10.62 billion; its shares were traded at around $148.62 with a P/E ratio of 14.8 and P/S ratio of 2.7. The dividend yield of CF Industries Holding Inc. stocks is 0.3%. CF Industries Holding Inc. had an annual average earnings growth of 57.3% over the past five years.
In the first quarter, David Tepper added 282,493 shares to his 647,703 stake in CF Industries Holdings. He sold out of the stock in the second quarter of 2009 when it was at an average price of $57.8 per share. The stock then rebounded and he bought 1,215,840 shares for $74.34 per share in the next quarter. He sold 568,127 in the third quarter for a large profit when the stock reached $86.56 per share. As of Thursday, the stock has reached $154.86 per share, having gained 162.6% in the last year.
John Hussman and David Dreman hold the stock, and George Soros, Mario Gabelli, Joel Greenblatt and Jean-Marie Eveillard sold out in the first quarter.
CF Holdings nearly doubled its sales volume in 2010 over 2009. It had consolidated net earnings of $440.7 million, compared to $448.5 million in 2009. CF Holdings has almost $1 billion on its balance sheet, as well as long-term liabilities and debt of almost $2.3 billion.
Potash Corporation of Saskatchewan Inc. (POT)
Potash Corporation of Saskatchewan Inc. is the world's largest potash company, the third largest phosphate producer and the second largest nitrogen producer in the world. Potash Corp. of Saskatchewan Inc. has a market cap of $45.51 billion; its shares were traded at around $53.24 with a P/E ratio of 22.2 and P/S ratio of 7. The dividend yield of Potash Corp. Of Saskatchewan Inc. stocks is 0.5%. Potash Corp. of Saskatchewan Inc. had an annual average earnings growth of 35.8% over the past 10 years. GuruFocus rated Potash Corp. of Saskatchewan Inc. the business predictability rank of 4.5-star.
George Soros added to his stake in Potash in the first quarter, and Ron Baron initiated a stake. In the fourth quarter, Mohnish Pabrai, Andreas Halvorsen, Daniel Loeb, Chris Davis and Mario Gabelli added to their Potash holdings; David Einhorn and Ken Heebner initiated stakes.
Potash generated $1.02 billion free cash flow in 2010, after losing $821 million in 2009. Potash has $1.4 billion of cash on its balance sheet, and long-term liabilities and debt of about $5 billion. Earnings per share increased to $2.02, their highest in at least ten years.
At the end of May, Citigroup analysts upgraded their recommendation for Potash Corp. The analyst P.J. Juvekar told Business Week in a research note three reasons for the upgrade: “tariffs in China and electricity shortages that could crimp that country's exports of diammonium phosphate, or DAP; the delayed U.S. crop plantings; and the fact that new fertilizer production facilities are being built but they won't be operating until after this year.”
Monsanto Company (MON)
Monsanto is a global provider of technology-based solutions and agricultural products for growers and downstream customers, such as grain processors and consumers, in the agricultural markets. Monsanto Company has a market cap of $36.24 billion; its shares were traded at around $67.62 with a P/E ratio of 25.9 and P/S ratio of 3.4. The dividend yield of Monsanto Company stocks is 1.7%. Monsanto Company had an annual average earnings growth of 32.5% over the past 10 years.
In the first quarter 2011, Steve Mandel initiated a stake in Monsanto, and Wallace Weitz, Mario Gabelli and George Soros reduced their holdings. In the fourth quarter 2010, Chris Davis and Richard Aster Jr. added to their holdings. It is the fourth largest holding of George Soros.
Monsanto’s free cash flow in 2010 dwindled to $643 million after several years of cash flow in the billions.
The company lost over $1 billion in the second quarter of 2010 due in large part to increased competition in its herbicide business. Also in that quarter, Monsanto spend $2.18 million lobbying the government on possible patent law changes, and antitrust and consolidation issues. Monsanto has faced criticism for rigid control of its patented gene modifications, through which the company has created plants that are resistant to insects and herbicides, among other things. Monsanto continues to work on new innovations, such as soybeans enriched with omega-3.
In a March interview with Bloomberg, Jim Rogers also expressed his bullish sentiments regarding agriculture: “Huge bull market in agriculture,” he said. “Agriculture prices are still extremely depressed on a historic basis. You know, the price of sugar has gone up 600% in the last 6 years, 5 years. It is still 50% below its all time high. 50% below its all time high. The scope for price increases in agriculture is staggering.”
George Soros is echoing their opinions about agriculture stocks – his largest holding is Adecoagro (AGRO, Financial), and he owns a 21% stake in the company. Agriculture and related stocks he and other gurus keep buying are CF Industries Holding Inc. (CF, Financial), Potash (POT, Financial) and Monsanto (MON, Financial).
Adecoagro (AGRO)
Adecoagro S.A. is an agricultural company in South America, with operations in Argentina, Brazil and Uruguay. Adecoagro S.A. has a market cap of $1.48 billion; its shares were traded at around $12.36 with a P/S ratio of 3.5.
George Soros first bought this stock in the first quarter 2011. He bought 27,158,603 shares, making it 5.7% of his portfolio and his largest holding. As of March 31, 2011, Soros is the only guru to own this stock.
Adecoagro is one of the largest producers of food and renewable energy in South America, producing grains, rice, oilseed, dairy products, sugar, ethanol, coffee and cotton. The company only has two quarters of financial results because it just IPO’ed at $11 per share. Its stock has risen 3% since its IPO.
Agecoagro’s 2010 gross sales reached $429.3 million, 35.9% higher than in 2009. Farming production increased 49.1% over the 2009/10 harvest year compared to the 2008/2009 harvest year. Total adjusted EBIT in the company’s farming & land transformation business in 2010 was $60.74 million, versus $46.82 million in 2009, a 29.7% increase.
“Rising standards of living in fast developing economies such as Brazil and China, coupled with ambitious mandates to expand biofuels production, and extreme climate issues in the world’s most productive countries (Australia, Russia, Brazil, Thailand, Argentina, China, etc) have tightened stock-to-use ratios across all agricultural products. Although supply continues to grow, driven by new investments and opening of new areas for agricultural production, it is not being able to keep up with the rapid growth in demand around the globe. This new scenario has caused an upward shift in long term agricultural commodity prices, setting an attractive environment for low cost commodity producers,” the company said in a statement.
GuruFocus discussed this stock in further detail here.
CF Industries Holding Inc. (CF)
CF Industries Holdings Inc. is the holding company for the operations of CF Industries Inc. and is a global leader in fertilizer manufacturing, as well as the second largest nitrogen fertilizer and third largest phosphate fertilizer producer in the world. CF Industries Holding Inc. has a market cap of $10.62 billion; its shares were traded at around $148.62 with a P/E ratio of 14.8 and P/S ratio of 2.7. The dividend yield of CF Industries Holding Inc. stocks is 0.3%. CF Industries Holding Inc. had an annual average earnings growth of 57.3% over the past five years.
In the first quarter, David Tepper added 282,493 shares to his 647,703 stake in CF Industries Holdings. He sold out of the stock in the second quarter of 2009 when it was at an average price of $57.8 per share. The stock then rebounded and he bought 1,215,840 shares for $74.34 per share in the next quarter. He sold 568,127 in the third quarter for a large profit when the stock reached $86.56 per share. As of Thursday, the stock has reached $154.86 per share, having gained 162.6% in the last year.
John Hussman and David Dreman hold the stock, and George Soros, Mario Gabelli, Joel Greenblatt and Jean-Marie Eveillard sold out in the first quarter.
CF Holdings nearly doubled its sales volume in 2010 over 2009. It had consolidated net earnings of $440.7 million, compared to $448.5 million in 2009. CF Holdings has almost $1 billion on its balance sheet, as well as long-term liabilities and debt of almost $2.3 billion.
Potash Corporation of Saskatchewan Inc. (POT)
Potash Corporation of Saskatchewan Inc. is the world's largest potash company, the third largest phosphate producer and the second largest nitrogen producer in the world. Potash Corp. of Saskatchewan Inc. has a market cap of $45.51 billion; its shares were traded at around $53.24 with a P/E ratio of 22.2 and P/S ratio of 7. The dividend yield of Potash Corp. Of Saskatchewan Inc. stocks is 0.5%. Potash Corp. of Saskatchewan Inc. had an annual average earnings growth of 35.8% over the past 10 years. GuruFocus rated Potash Corp. of Saskatchewan Inc. the business predictability rank of 4.5-star.
George Soros added to his stake in Potash in the first quarter, and Ron Baron initiated a stake. In the fourth quarter, Mohnish Pabrai, Andreas Halvorsen, Daniel Loeb, Chris Davis and Mario Gabelli added to their Potash holdings; David Einhorn and Ken Heebner initiated stakes.
Potash generated $1.02 billion free cash flow in 2010, after losing $821 million in 2009. Potash has $1.4 billion of cash on its balance sheet, and long-term liabilities and debt of about $5 billion. Earnings per share increased to $2.02, their highest in at least ten years.
At the end of May, Citigroup analysts upgraded their recommendation for Potash Corp. The analyst P.J. Juvekar told Business Week in a research note three reasons for the upgrade: “tariffs in China and electricity shortages that could crimp that country's exports of diammonium phosphate, or DAP; the delayed U.S. crop plantings; and the fact that new fertilizer production facilities are being built but they won't be operating until after this year.”
Monsanto Company (MON)
Monsanto is a global provider of technology-based solutions and agricultural products for growers and downstream customers, such as grain processors and consumers, in the agricultural markets. Monsanto Company has a market cap of $36.24 billion; its shares were traded at around $67.62 with a P/E ratio of 25.9 and P/S ratio of 3.4. The dividend yield of Monsanto Company stocks is 1.7%. Monsanto Company had an annual average earnings growth of 32.5% over the past 10 years.
In the first quarter 2011, Steve Mandel initiated a stake in Monsanto, and Wallace Weitz, Mario Gabelli and George Soros reduced their holdings. In the fourth quarter 2010, Chris Davis and Richard Aster Jr. added to their holdings. It is the fourth largest holding of George Soros.
Monsanto’s free cash flow in 2010 dwindled to $643 million after several years of cash flow in the billions.
The company lost over $1 billion in the second quarter of 2010 due in large part to increased competition in its herbicide business. Also in that quarter, Monsanto spend $2.18 million lobbying the government on possible patent law changes, and antitrust and consolidation issues. Monsanto has faced criticism for rigid control of its patented gene modifications, through which the company has created plants that are resistant to insects and herbicides, among other things. Monsanto continues to work on new innovations, such as soybeans enriched with omega-3.
