Hi Paul -
I will pass on AGM. It's not a pure play for me as it reall is not an AG Food related stock. If you do run a cross a value AG play that I can add to my basket, please post. My Brazil AG related companies are getting crushed.
ULTR reported earnings (a loss after some one time adjustments) was a bit disappointing as I thought this would be the quarter they would surprise with a gain.
Ultrapetrol Reports Financial Results for Second Quarter 2011
finance.yahoo.com
From the article:"...Adjusted net loss for the second quarter of 2011 was $(6.0) million or $(0.20) per share, which excluded a $(1.0) million provision or $(0.04) per share, for unrealized foreign exchange rate gains on U.S. dollar-denominated debt of our Brazilian subsidiary in the Offshore Supply Business. Net loss for the second quarter 2011 was $(7.0) million or $(0.24) per share, as compared with net income of $0.7 million, or $0.02 per share, during the same period in 2010....".
Some of the issues (summarized by a knowledgeable poster on the Yahoo Board) include: The PSV fleet had a bunch of dry docking in the quarter, which both costs you revenue as the ships are out of service and costs you money for the dry docking. There were also likely some costs related to receiving and the start of repositioning the newly received PSV. The River business clearly was heavily impacted by the closure of the upper Parana for half the quarter. This is a business that is very sensitive to scale effects and I suspect that killed the margin in the quarter. The good news is that the tonnage still has to be transported, so hopefully this is just shifting earnings into Q3 and Q4. Also they are experiencing delays with the Indian yard. I imagine that ULTR will be getting penalty money due to the delays. Since there is a lender involved in financing these ships, there has to be a completion guarantee from a creditworthy third party (usually a large bank). That means that if the yard ultimately fails to deliver, ULTR and its lender will get their money back.
I am holding to my current position but do not plan on adding any new shares. The company has invested a lot of money into both their River Business (w/ a new Port Facility Yard w/ several construction jobs scheduled) and in their PSV fleet, totaling over half a billion in new assets.
I am underwater on ULTR w/ my average cost at $4.88/share. I still see this stock getting back to $12.00/share once their PSV fleet is fully brought in service and the scaled up River Barge Business is fully utilized especially their new port facility . It could be 6 to 8 months before the FCF starts flowing from both of these business divisions. Increasing FCF could last for several operating seasons. Their operations are not dependent on the Global Economy and should be more affected on Soybean consumption which I see as a steady YOY grower.
I have Buys at higher levels (a few shares at $6.00,$8.00 and $9.00 basis) and may sell those shares and replace them in 31 days with current lower price shares. The stock will probably not move too much until their 3rd or 4th quarter report.
EKS |
