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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (92966)	3/31/2008 1:33:09 AM
From: glenn_a	Read Replies (1) \| Respond to of 110194

Thanks for the reply Jay. Yes, there is a bit of a gap that way. No, the remaining 9% does not have any ag plays. Here's the thing. Probably half of my current net wealth has come from the appreciate in the past 3 years in 2 stocks - both China-based agricultural related plays that trade on the TSE: Sino Forest and Hang Feng Evergreen. Sino is up 10x from my average purchase price, and over 15x from its October 2002 low. It was my largest holding by far for much of the past several years. Hang Feng is up 5x from my average purchase price. And it was my second largest holding. At the beginning of 2006, these stocks still represented probably 25% of my portfolio. And I also held some what at the time was called Saskatchewan Wheat Pool (I believe you held shares in this way back). But last summer I sold both stocks, and they have basically treaded water ever since. Hang Feng, for example, current trades at something like 15x estimated 2008 earnings, with a 30% estimated % earnings growth rate. Not bad. BUT, I remember in 2002 picking up shares in Sino Forest at 3x TRAILING earnings, the company had had something like 40 consecutive profitable quarters, and looked set to deliver 20% annual earnings growth over the next 5 years easy (which it has done). I just can't find that kind of value in the ag stocks at present. It's hard to justify buying a stock like Hang Feng, when I can buy a Canadian Seismic company trading at just over 4x TRAILING earnings, which is an industry consolidator in Western Canada, is currently profitable, and looks positioned for substantial earnings growth due to a forecasted turn around in natural gas prices. That being said, if Hang Feng or some other Ag stock with great growth potential came down to the low-teens or high-single digit P/E level based on current year earnings, I might reestablish my position. But in these times, my strategy is to buy on EXTREME negative sentiment. I just don't see the same value in the ag stocks that I could find 3 years ago, or can currently find in some other stocks. Am I being to hard on Ag stocks? Should I be more willing to pay up for their earnings growth potential? I'd be interested to hear your thoughts. Best wishes, Glenn

To: TobagoJack who wrote (92966)	3/31/2008 1:41:05 AM
From: glenn_a	Respond to of 110194

BTW, Canada's Globe & Mail ran an article in this past Friday's paper titled "Reaping the rewards from hot agriculture stocks". The article can be found here: reportonbusiness.com Some decent earnings growth forecasted, but I'd like to see a bit more pessimism in the sector before I re-established a position in any of the covered stocks. I'm currently watching Migao and Hang Feng. They've come down from recent highs, but I'd like them to come down just a bit more. :) g