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Berkshire Hathaway Inc. Message Board

  • risk_adverse99 risk_adverse99 Aug 3, 2013 6:07 PM Flag

    Money Making Idea on Potash?

    Just curious. Can't decide if it is a good opportunity or an inherently lousy business.

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    • Also check out CF, I initiated a 1% position in it today at 192 and sold more put options against POT in my IRA today.

      This IRA is still over 50% cash.

      • 1 Reply to axpkocop
      • CF Industries/CF-----DEERFIELD, Ill. (AP) -- "CF Industries Holdings Inc.'s board of directors has approved a 150 percent increase in its dividend, the fertilizer maker said Thursday.

        The company will now pay shareholders a quarterly dividend of $1 per share. That's up from 40 cents per share. CF Industries will pay the dividend Nov. 29 to shareholders record as of Nov. 15.

        "This dividend increase reflects our confidence in the strength of CF Industries' business model and is part of our ongoing commitment to build long-term shareholder value," said Stephen R. Wilson, the company's chairman and chief executive.

        Shares of CF Industries added $3.21 to $212.75 in after-hours trading"

        Thank you CF.

    • "In 1870, 70-80 percent of the US population was employed in agriculture.[citation needed] As of 2008, approximately 2-3 percent of the population is directly employed in agriculture.[8]

      In 2010, there were 1,202,500 farmers, ranchers and other agricultural managers and an estimated 757,900 agricultural workers were legally employed in the US. Animal breeders accounted for 11,500 of those workers with the rest categorized as miscellaneous agricultural workers. The median pay was $9.12 per hour or $18,970 per year."

      Our country runs on cheap food. I have a list of companies I believe are recession proof because they aid the farmer in his daily endeavor. Recently with the collapse of POT I added it to my short list but only through selling put options against it.

    • There are certainly some nice barriers to entry.
      The cost of a new potash mine is measured in the billions, and I've read the resource is depleting worldwide at a significant rate. Strat had some insight into this commodity if I remember correctly.
      Unlike oil, there is no viable replacement for this necessary stuff,........... is there ?

      Having said that, there seems to be a short term surplus and now that the consortium is blown up, the motivation for each player is to make profits in volume rather than on margin, so it may not look good for awhile. I'm watching Mosaic and POT pretty closely, haven't done anything yet.

      • 1 Reply to davidyab
      • Wood ash is a useful source of potassium. I'm sure if there were a big potash shortage, it would get used a lot more.

        Fertilizer is probably a pretty good long term investment, but remember it is cyclical, and the price of Iowa farmland is way up right now, suggesting that we might be late in the current cycle.

        If we stopped requiring (subsidizing, it isn't really required most places) ethanol in gasoline, the price of fertilizer would probably drop, but I don't expect that to happen.

    • Mr. Buffett buy only brand names, never commodities. He purchased a railroad which transports oil and coal, but not the oil wells or coal mines themselves.

 
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