Show Me The Money

Show Me The Money

March 30, 2009

As we have watched the Fertilizer Wars unfold, our comments here, as well as have been from the perspective of a fertilizer peddler. What have been missing from this discourse are some observations from a shareholder’s perspective.

We are certainly equity punters, but as a rule we don’t invest in fertilizer stocks. It seems that we have developed far more efficient ways to lose money directly in this sector. That said we have still been curious as to what investors might be thinking while these fertilizer producers have been blasting away at each other. Unfortunately Google searches have netted little of value in the way of analysis, just press clips and protagonists’ propaganda.

Finally a gem popped up today in Forbes: Fertilizer Bids Keep Growing . What is interesting is the nuance expressed by Carl Gutierrez that there may be another unseen force in orbit with the three current protagonists…sort of a death star exerting invisible gravitational forces on at least Terra’s orbit. Is that you Lord Darth?

From our own perspective, it would seem that both Agrium and CF have been a bit stingy. Possibly the Calgary team has some doubts about the potential liquidity of some of their previous nitrogen production purchases. Surely there is a black market for the Egyptian Pound in Chicago. CF has cash of course, but spending it is another matter. Reaching for their check book may be on their play board for the fourth quarter, but it will be after the double reverse, and the Hail Mary pass.

In closing we should observe that we are not qualified to represent any of the shareholders who are caught up in this brawl, but on the off chance that we would land this assignment, our opening position would be: Show me the money.