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Strategies & Market Trends : Value Investing

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To: Spekulatius who wrote (42945)	6/8/2011 1:41:22 PM
From: E_K_S	1 Recommendation of 78700

Hi Clownbuck - AG Stocks finance.yahoo.com Re: Bunge Limited (BG) Agrium Inc. (AGU) Archer Daniels Midland Company (ADM) My favorite is BG. They have the best global assets IMO of the group with exposure in Brazil, Far East, Europe and the Americas. Their LT debt profile is one of the best of the group where Net Income to LT Debt coverage is .53 (it takes only 1.88 years of Net Income to pay off their LT Debt). They are the only one in the group that has a Joint Development Agreement with Solazyme (SZYM). The companies are working together to develop microbe-derived oils utilizing Brazilian sugar cane feedstock. When this process is completed and put into production BG will have the most efficient bio-diesel & ethanol production facility based on sugar cane feedstock in the world. BG has little exposure to fertilizers as they sold that division last year and used the proceeds to expand their sugar cane production in Brazil. AGU is like a mini BG but w/ a fertilizer division (specifically w/ a network of distributors located in Brazil & Argintina). ADM does not have as much exposure to the milling and plant oil production as BG or AGU. ADM has high exposure to the fructose (corn syrup) market (as much as 45% market share in the U.S.) which I believe is an area for demand shrinkage due to the human health impact(s) of this processed product. Processed corn products are still important for feed for farm animals which is a huge growth market in the far East (Japan & China). All three companies have compelling forward PE's : ADM 8.7, BG 10.56, & AGU 10.49. However, their debt profiles are quite different. The LT debt to Net Income coverage for ADM is 6.79 years vs 1.88 years for BG & 2.95 years for AGU. Price/Book Value: BG 0.65, ADM 1.15 & ADU 2.44. I am buying all three if I can pick them up at the right price. I am starting from a zero position in this sector other than owning shares in DD which operates a seed division and Noble Group Ltd. (NOBGF.PK) that is an AG logistics company focused on moving products to China. Many of my natural resource companies produce several of the fertilizers that are required inputs to the food production. Other than that I have no "pure" play in this growing industry. I would like to build at least a 5% position in the portfolio covering the AG sector. -------------------------------------------------------------------- FWIW I started a tracking position today for Archer Daniels Midland Company (ADM) $29.88/share, I have GTC Buy orders at lower prices for more ADM @$25.47, BG @ $66.30 and AGU @ $62.94. I also added to my CoreSite Realty Corporation (COR) yesterday trying to build up my Data Center REITs positions (DLR & COR). Thanks to Grommit for alerting me to several of these value opportunities. EKS

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