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Third Avenue Management on Viterra Inc

June 11, 2010

Amit Wadhwaney of Third Avenue Management recently discussed Viterra Inc (TSE:VT) which he views as undervalued. In the interview, he discusses it's strengths. He stresses it's great assets and wonderful balance sheet. He gave glowing comments about a recent Australian acquisition which he describes as shareholder friendly and actually growing shareholder value.

Viterra Inc. (Viterra) is a Canadian agribusiness organized into five segments: Grain Handling and Marketing, Agri-Products, Food Processing, Feed Products and Financial Products. The Company’s Grain Handling and Marketing segment warehouses grain and oilseeds grown in South Australia in bunkers, silos and grain sheds. The Agri-products operations also include an ownership interest in a nitrogen fertilizer manufacturer and a network of retail locations. Viterra’s Food Processing segment produces semi-finished and finished food ingredients for consumer products companies and food processors worldwide. Viterra’s Feed Products segment processes raw materials into livestock feed, ingredients and nutritional supplements. The Financial Products segment offers financial products to producers in North America, primarily consisting of credit programs to support their on-farm cash flow requirements. In May 2010, Viterra Inc. acquired Dakota Growers Pasta Company, Inc.

Third Avenue management first acquired Vitera in 2006. For most of 2006, Viterra hovered right around $8 per share. It recently closed at $8.19. Given Wadhwaney's thoughts, maybe Viterra is worth further consideration. See the full video below:


About the author:

Karl is currently a software engineer in Connecticut with a bachelors of science in electrical engineering from Clarkson University. He has been investing since 2001 and interested in value investing since 2005. Karl is continually striving to learn more about investment.

Rating: 3.7/5 (7 votes)


Ccyork - 5 years ago
Viterra (VTRAF) is one of only two stocks on my watch list that look truly cheap right now to me. The other is Ensco (ESV).
Kfh227 premium member - 5 years ago

I haven't valued Viterra (or else the article would have mentioned it) so I have to ask. What are your thoughts on valuation?

I thought the video presented a well thought out thesis though.
Ccyork - 5 years ago
Hi Kfh227,

Well I gave up on discounted cash flow a long time ago, so my valuation methods are quite simplistic.

I'd like to buy VTRAF sub-$7. But even at today's price of $7.89 it sells for:

.88x Book

1.11x Tangible Book

S&P recently upgraded the rating on their bonds to investment grade:


They are in a sector that I strongly believe will be growing over the next decade. I'm also watching AGCO and I hope it drops some more.

Kfh227 premium member - 5 years ago

That's fair enough. Honesty is the best policy in everything one does.

I've gone from PE ratios (ya, the early days), to more savvy methodologies like discounting free cash flows to simply realizing that multiples are all that really matters so long as the appropriate multiple is used. The appropriate multiple per company is the trick.

Of course, understanding the business is probably the time consuming part along with know where the business (and industry) are probably going (with some certainty).
Ccyork - 5 years ago

I believe the more variables you need to "guesstimate" in order to make a valuation, the less accurate your valuation is going to be, and the more possibility of error you introduce

If you make sure you buy stuff when it's really really really obviously cheap, then an investor will do fine. Less work that way too.

Kfh227 premium member - 5 years ago

Agree 100%. better to be approximately right than precisely wrong.

So, be about right and pay half! :-) The way of the value investor.

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