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Strategies & Market Trends : Value Investing

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To: gcrispin who wrote (43519)	7/23/2011 1:43:05 PM
From: E_K_S	Read Replies (1) of 78682

Hi gcrispan Thanks for the reference to the Food Processing and Agriculture Farming ( Subject 24638 )SI thread. I find that many of these large conglomerates have a way of stumbling into some of these forward looking ventures which can create shareholder value through their participation. Many times it is just the infusion of new capital into some of these projects that starts the ball rolling. Bunge Limited (NYSE: BG) and Solazyme, Inc. (NasdaqGS: SZYM) ( Message 27423411 ) is one group I mentioned up thread that has a JV project in Brazil to produce ethanol and other complex oil products from sugar beets. I have been accumulating shares in BG as I consider them a value Buy selling at a 4 PE (w/ forward PE of 11). More importantly, they are committing some very large chunks of capital into some of these new emerging AG technologies that increase the efficiency in their after harvest production operations . I would not be surprised to see one of these large conglomerates begin to invest seed money into one or more of these Integrated Seawater Forestry Farming ventures. The key will be which one(s). I was quite impressed what Eritreay is doing with mangrove tree production ( youtube.com ). I have investments in Fibria Celulose SA (FBR) that grow eucalyptus tress in Brazil to produce paper pulp for China. FBR has a profitable operation but requires a lot of capital (typically LT debt) to achieve the efficiencies of scale to run their operations. Their earlier company formation was wiped out from the US $/Real currency devaluation (FBR is the result of a previous BK) which only points out that the huge impact a strong/weak$US can have on leverage capital used throughout the world. Therefore, I see the next big transition is the flow of new capital into several of these AG resource regions (primarily third world) combined with new efficient technologies (from U.S , Israel & Canada) probably introduced by one or more of the mega conglomerates through a JV or subsidiary company. One last example where this occurred (not w/ agriculture) was DuPont's China Solar Panel JV resulting in several leading edge manufacturing facilities in China. I have followed this project through inception and posted several articles of their progress to this thread. They now operate a several billion dollar subsidiary (started w/ a $25 million investment) supplying solar panels throughout China. It was pointed out by one or two posters on this thread that their investment and the corresponding sales would be too small to move the needle for a company as large as DuPont. That's what makes it so exciting since it was their capital infusion (eventually over $1Billion) which resulted in billions of new sales accounting for 10% of DD's 2011 profits and upwards of 17% of their profits for 2012. The value proposition will be if a BG or DD or any other of the large international conglomerates commit new capital to one or more of these projects. We have seen Google do it for solar and wind farms but no one yet for integrated Ag farming to the extent that "will move the needle". EKS

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