I have been looking into farming investments and do not understand how one of the largest farming operations in South America is unable to make money or pay shareholders a dividend. It seems like this investment is going nowhere and I do not understand how farming does not make money when farm crop prices are the highest in years?
Does this have to do with government corruption or management taking all the profits as salary and stock option expense. What gives? The other large farming entity looks much better, paying a dividend and generating profits. I am speaking about CRESY.
I believe the reason they don't yet pay a dividend or are profitable is
because they are still in the 'Acquire and Develop' (A&D) stage of
their corporate development. Their is a permanent and growing
need of their product, and they are loaded with product. Also, the
prices for those properties are constantly edging up.
South America experienced a drought in the 2011/12 season negatively impacting production. AGRO hedges a significant amount of their production and therefore lags the recent commodity price increases. Cresy has a large property development/ management business that is highly leveraged and supports the div. Both are significantly exposed to the fiscal/ political issues in Argentina. For the AG component, I prefer AGRO. It is a bargain here assuming the the issues in Argentina do not significantly impact the company. IMHO.
Read SEC filing-424B7, dated 1-31-31. Morgan Stanley is the sole underwriter of the 13.9 mil share offering.
Of particular note is that MS intends to manipulate the price to not let it fall much below $8. They are doing this by shorting and NAKED SHORTING.
recall the 2 weeks after the offering commenced when AGRO went to $8.50 and higher and wouldn't fall below $8.50, despite 13.9 mil shares being 'offered to the public' at $8.. Other posters have commented on this strange action as volume, mostly flipping, wasn't close to 13.9 mil shares being bought.
During this time frame multiple times the thought was MORGAN STANLEY IS SHORTING THE STOCK.
they are probably doing it now. When the stock falls near $8 or below MS covers the short, supporting the price.
With the crushing 35% corn and soybean export tax how can AGRO make money.
In 2008 the Argentine peso was 3 to the $1. Now it is 5.08 to the dollar. The private exchange rate is around 8 to the $1. AGRO debt denominated in dollars requires interest payments in dollars. With the peso in freefall that spells bad news for AGRO revenues and profits converted to dollars.
In the prospectus it states that all 10% and greater holders have agreed to a 90 day lockup,i.e, after 90 days from the commencement of the offering(2-5), these big holders can sell if they choose.
In one filing or PR the a Morgan Stanley phone is given. Someone should call and see how many of the 13.9 mil shares are unsold.
This one is a #$%$ shoot . One would hate to buy 10,000 shares at $8.10 and see her tank to $6.