Au D’Manure

Au D’Manure

posted on 8/18/2010 11:20:17 AM | 228 reads  | Post #106537
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Dear Contra_Folk,

If higher potash prices are priced into BPH’s takeover model, then why not just make a serious bid with a proper takeout offer of POT well over $130 one might ask?  As it now trades @ $145-$150, one has to ask themselves, why hasn’t China’s sovereign fund (CIC) also not made a competitive bid for POT-N? Maybe the whole Pot deal just stinks!

Scarcity is in the creative domain of the Wizards…and in this case, the C.E.O.

So going down that road, why are people not tripping over themselves with competitive bids?  We already know we will end up with protectionism rants, developing nation’s unsatisfiable resource hoarding and exploitation concerns, eventually leading to the end game of political windfalls from new resource-laden excise tax revenue streams dominating the voter headlines well above any political pressure of hollowing out of the Country’s true economic powers.

With 50 billion new hungry mouths to feed globally over the next twenty years, we will indeed need new fertilizer mine supplies,  but only in twenty years hence from today.

Contra_Question to ask is… what happens if the Far East has alternative plans, …say they plan several new sources of fertilizers… say even  through inventive synthetic process means, or perhaps just with new global potash supplies coming on stream in 2015 – hedged delivery price @ $350-$450/tonne.  Russia, Africa, South America, and a host of others have new mines in development (BHP’s Jensen), so the questions remains, why no China (CIC) bid?  Is it too expensive as already announced? Or could it all just be a big smoke screen, and a Gmen Fedusury pump and dump, for there maybe no such promised supply concerns ahead?

LYRICS: “Ooh, ooh, that smell. Can’t you smell… that smell…. around you? Hoo, hoo, hoo, hoo.”

Could it simply be another Gmen’s attempt to feign growth prospects in order to make assets bubble up, or an ingenuous act by the Aussie and Cannucks heads of banking wishing to make some more “10/30 year spreads” bazooka gun power, by using a cleverly designed ploy of criss-cross-market of a $38 billion dollar takeover play with an action plan involving a 30% jump in the market capitalization of a domestic TOP 10 holding – all without spending a domestic taxpayers dime or even a single shareholder penny? (Questionable if the $350m breakup fee is even truly payable)

With 296.63m shares outstanding, the holders of POT made out with well over a cool $5 Billion in increased leverage market cap yesterday, or share value today,  if they could manage to bear exiting any more than 50 million shares at 30 times P/E.

I believe it was also a one page letter,… delivered at the doorstep, after a meeting. But, perhaps not.

So a good ol’ share price pump and dump – in effect really, and a management plan to then pretend to be interested in completing takeovers that will drag on for years (ie: AGU and CF), seemingly ever supporting (read: with share buy backs) the higher than pre-stinker bid in perpetuity, until that deal expiry point well off into the unknown future comes to be, along with a sub $4 in FY EPS .

This is yet another example of what happens in the fake “tap out” trap.  When companies don’t do what they said they would do, and “unplanned” market price drops happen for example, they don’t grow at the rates of growth promised by management, or the rates the anal-ists baked into the earnings future multiples of these now stagnant “growth” companies with projections that will no longer come into fruition, because they are no longer growing –  especially not at 30 times airy-fairy future earnings.

Share Related Items
Market Cap (Mil) 43,700.48
Shares Outstanding (Mil) 296.63
Float (Mil) N/
Fiscal Year Dec 31
Assets $10,248,800,000  (2008)
$9,716,600,000  (2007)
Revenue $9,446,500,000  (2008)
$5,234,200,000  (2007)
Net Income $3,495,200,000  (2008)
$1,103,600,000  (2007)

I’d Buy That,
Contra_Man

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About ContraManFund

Fictional (maybe not if you are an accredited investor) trading of a long/short contrarian-driven investment model portfolio based upon current economic environments and counter-intuitive trends. Legal Disclaimer The content on this site is provided without any warranty, express or implied. All opinions expressed on this site are those of the author and may contain errors or omissions. NO MATERIAL HERE CONSTITUTES "INVESTMENT ADVICE" NOR IS IT A RECOMMENDATION TO BUY OR SELL ANY FINANCIAL INSTRUMENT, INCLUDING BUT NOT LIMITED TO STOCKS, OPTIONS, BONDS OR FUTURES. The author may have a position in any company or security mentioned herein. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility. Please consult your own investment advisor before making any investments anywhere, and always do your own due diligence before undertaking any individual investment.
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