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Strategies & Market Trends : Value Investing
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To: - with a K who wrote (19901)10/19/2004 12:14:22 AM
From: E_K_S  Read Replies (1) of 78666
 
Tyson probably hedged at the wrong time and as a result elected to pass on their "current" hedge option and buy at the spot market. The problem with hedging is management isn't always right in their timing.

If you read between the lines for Pilgrim's Pride they stated that their operations were more efficient. I assumed they were more right than wrong with their grain hedges.

The large producers generally hedge their grain inputs. I guess my observation for low grain prices looking forward would be a net positive for these operators only if (1) future hedges locked in the "new" low prices and (2) chicken operations were diversified enough so they could maintain or raise prices in the future.

Anyway, as I stated earlier, you can not always time these cycles but rather you want to buy at the point where it is favorable to the operators. You are quite correct that if the company has good fundamentals and is profitable during the lean times, then they should do really well if they can take advantage of the good times (like low grain prices).

I like SAFM. The value measures you posted are quite attractive. I also like the idea that grain prices are at or near a cycle low. I plan to pick up a few shares as I believe the downside risk is quite low and they could have a few great quarters of growing earnings.

EKS
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