Tuesday, February 21, 2012
The Mosaic Company
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.