Wednesday, April 8, 2009

The cupboards are bare!

After Mosaic reported earnings Tuesday, Fast Money panned the stock. How brilliant. They knew nothing about the make-up of the earnings, or where the shortfall came from, or the tax shifting that affected this quarter which means MOS won't have a tax liability for the coming quarter, nor did they consider the effect of the wet planting season, nor did they consider Cargill's relationship with Mosaic, nor did they remember that Bunge jumped when it missed numbers in February, but instead, they were happy to blurt this out:

"Bad trade today, worse trade tomorrow."

That was a bad call yesterday, and a worse call today!

That really worked well didn't it? Selling it at under 40 in Tuesday's afterhours session?

For those not checking, the stock today closed up 2.67 to $45.61 on 18 million shares, after trading down near 40.

That my friends, is the start of a new uptrend in the stock.

I advertised the stock this weekend, but I didn't think that Wall Street would throw out more of their bullsh*t on the stock.

But speaking of that, the cows at Ruth Chris' are rather tasty, and RUTH, at $1.60 looks ready to double!

So I picked up some more of the Mosaic April 50 calls at .15 cents! Soon I think I'll be advertising this Mosaic pick; after all, when Potash was at 215-220, I advertised the selling of it, when the average Wall Street target on POT was 308!

And when Potash insiders tried to prop up their stock, buying overpriced paper, over 100 points higher, I re-advertised my sell on that number.

So now that Wall Street fell over their faces, warning us about potash prices, and warning the herd to sell Mosaic before it's earnings Tuesday, while they were also cutting their targets on POT, it would make sense that, I now like both of these numbers!

And as I advertised my advertising of Potash when the stock cracked, I'll soon be advertising my bullishness on Mosaic after it trades substantially higher!

If you want to listen to the analysts on Mosaic, you should, at a minimum, at least listen to these rocket scientists during today's conference call, and if you really can highlight a salient or clever point that these Wall Street folks brought up, then pay them heed.

Bob Koort, of Goldman was worried about the next Chinese contract, and that it may take three months for a price to be hammered out, so supposedly, the inference is, the farmers, and the rest of the world will wait until China takes the plunge.

Well if China is going to wait three months, they will be paying higher prices.

I suppose China forgot to tell Brazil, or the other countries in Latin America to quit paying up, and they must have forgotten to tell India to also quit buying.

You can sum up the whole Mosaic story in just a few points.

First, Mosaic dumped inventory that had a higher fixed cost which pinched their margins, and farmers in North America, were trying to squeeze out some extra coin by not applying much potash, since you have residual nutrients in the soil.

Larry Stranghoener of Mosaic had this to say about inventories:

I think it goes back to the question earlier about the emptying of the supply chain and how quickly demand might recover. I think Jim laid out the case pretty clearly that cupboards are going to be bare throughout the world by this summer or early Fall. Should that happen and should the world suddenly realize it needs more potash and phosphate we will be prepared to respond very, very quickly.

Now Wall Street is so used to bankers lying to the street, that they don't believe anything that management says, even if they are in farming.

This time, Wall Street is wrong.

Yesterday, I had to meet someone at a sports bar for lunch. I went in, and there were only six customers in the bar! Now a Wall Street analyst could tell the world that their channel checks at restaurants would indicate that no-one is even eating at restaurants anymore.

How accurate would that be? Has anyone seen the action in the restaurant stocks? You can cherry pick information anywhere.

Yesterday evening, I needed to get some new tires on my SUV. I had gone to Costco, but they were out, so I went to another place, where I have a little rapport with the owner, Floyd. I asked him how business was, and he said better, but he'll stay open later for me and then he laughed! But he did tell me that they were almost out of tires! I went in the back as he showed me the inventory. (And he has quite a large company, that would be a representative cross section across the country.)

For my truck, he had only one tire left that was of the lower generic brands. The next level up, a Cooper tire (CTB 5.78), he had supply, but very little, and Goodyear (GT 7.69) had just a little bit more. Michelin--you could buy whatever you wanted.

Now let's compare the restaurant channel check, with the tire check. Which one is more representative of the economy?

It's the same with Mosaic.

The bearishness has blinded Wall Street with the tightness that is in the channels, that just isn't yet showing it's head.

But you can see the hairs all over the bears arguments!

And today, the bears didn't even get a bone!

It's just another tired story!


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