Tuesday, February 21, 2012
As I've linked Teva with Under Armour, so am I linking the Mosaic Company with Red Hat. After selling part of my Red Hat holdings in an attempt to diversify, I purchased Mosaic at a little over 50, or at about the same price that I sold Red Hat. Since that time, RHT has dropped only slightly to 48 but Mosaic has gone to 54 so again, so far, so good.
Mosaic has been on my radar for close to a year and I've been tracking it since it was near $80. Formed in 2004 as a merger between IMC Global and Cargil's crop nutrition division, I originally started watching Mosaic because of its spin-off with Cargil. As a spin-off, anyone holding Cargil automatically picked up shares of Mosaic. As a large cap company, Cargil is of course held by a number of large cap funds. Mosaic, however, is not a large cap stock. Therefore, all the large cap funds that held Cargil would be forced to sell their non-large cap stock Mosaic eventually. This situation appears then to be a classic overlay as the price would necessarily have to go down as more shares hit the market regardless of the companies true value. This fact was pointed out in an article I read last May as evidently despite spinning off in 2004, May 2011 was when the Cargil distribution was agreed upon. This situation and a way to profit off it seemed clever, so I put Mosaic on my watch list. Coupled with the fact that its an agri-business and thus in my wheelhouse made this a natural fit for me. Since I liked the stock at $80, I obviously love the stock at $50 and my long term tracking will hopefully continue to pay off.
Basically, Mosaic is about the most boring company one could conceive. It produces nutrients for crop fertilizer. These two nutrients are potash and phosphate, and as the second largest crop nutrient company, it is the largest producer of phosphate and the second largest producer of potash. As its inception was 2004, there is not much history to write about, but I look forward to a good solid holding with room for reasonable growth while hedging my bets on Red Hat.
In some aside news, Under Armour was at $84 today passing its $82 mark that I sold half my stake at. However with Teva at $45 (X2 for comparison with UA making it $90) I am still ahead on that. In Crocodile Gold news, the board did agree to allow 70% of its stake to be sold at a 0.62. However, I missed the deadline, so I assume that I own part of the remaining 30% although at the non-premium 0.55 per share.
Saturday, February 4, 2012
This Israeli pharmaceutical company, specializing in generic drugs, has been on my radar for quite awhile. Teva allows me to diversify into an area I do not currently own, has good numbers, had dipped below its normal trading rate (when I purchased it), and carries a Motley Fool 5 star rating. This purchase was also a direct response to trying to diversify away from my two largest holdings, Red Hat and Under Armor. As the purchase price of Teva was roughly 1/2 of what I sold some of my Under Armor, I plan to follow this in conjunction with UA to see how good or bad my choice was. I sold UA at $82 and it is currently at $77 (still a strong long term holding - look around, you see the logo EVERYWHERE) whereas I bought Teva at $40 and it's at about $46 so so far so good.
Teva, originally Salomon, Levin, and Elstein Ltd. started in Jerusalem in 1901 as a distributor of medications. During the Nazi rise in the 30's, drug imports from Germany dried up so the three founders of Teva, recognizing this market vacuum bought land and started a drug factory. During World War II, imports in general stopped, so the local companies supplied all the pharmaceuticals for the local market. During this time, Salomon, Levin, and Elstein (SLE) became one of the first companies to offer a public offering and be listed on the Tel Aviv stock exchange. When the war ended they were positioned to expand into global markets. In order to fully compete, many of the small local factories including SLE merged forming Teva, so-called for the Hebrew word for Nature. Through further acquisitions including multiple manufacturing plants, they were able to separate their penicillin and non-penicillin making plants. Evidently, this is important for health regulators and authorities and allowed Teva to enter the US market. Throughout the 80s they continued to expand, buying manufacturing plants, medical device companies, etc. They have continued to expand and became the largest generic drug manufacturer in the world in addition to one of the top 15 pharmaceutical companies.
Wednesday, January 11, 2012
Since looking at my portfolio in aggregate and making some mental decisions, I have fortunately pulled the trigger on part of my plan. After the week of November 14 in which we saw huge gains in the market and the Dow hitting in the mid 12,000, I dumped some of my Red Hat and (sigh) half my Under Armour. My timing was extremely fortuitous as both stocks were near 52 week highs. Since that time, Italy's debt has bubbled to the forefront and unlike Greece, which could be bailed out, the back and forth on will it or will it not be saved will not occur with Italy. The market, of course, fell the much ballyhooed greatest amount for any Thanksgiving week since 1932. So now I have cash on hand and, after ping ponging back to its cyclical low of 11,100, dare I pull the trigger on Mosaic and Teva? The issue is do I think that "solutions" to Italy's problems will pop up sending the market up, or is Italy and the European union a lost cause and were heading for a Lehman like fall?
Well, I did pull the trigger near the lows, and diversified by taking my $52 Red Hat money and buying Mosaic, and my $82 Under Armour money and buying Teva. Since that time, Red Hat has falled to about $43 and Under Armour has fallen to $75 whereas Mosaic is up to $55 and Teva up to $43. So my diversification plan worked so far. I will point out, I still love Under Armour as a long term hold, and if it falls below $70, I would try to accumulate more of it.
With the leftover money, I increased my Brigus Gold holding. That has since fallen. Mining stocks took a bath in 2011, and I was mildly exposed. Although Northgate went way up when it was purchased, Brigus and Crocodile have fallen. Indeed, Crocodile has recently been the target of a major stock purchase by a holding company. They want 85% of the stock and are sadly offering less that what I payed. So, either I hold Crocodile and hope they don't get taken and keep that with Brigus as my undervalued mining stocks while dumping Aurico (the company that bought Northgate) and purchasing another mining stock (maybe silver). Or, I accept Crocodile gets bought, I lose on that high/risk high reward investment, and look for another mining stock. My long term goal is 3 stocks totaling 12% of my portfolio. In the meantime, I really like Brigus and look for strong gains this year.