But this fits into my thesis I've been pushing out the past week or two. Unlike financials which no one seems to want to buy (except pundits) these companies have real assets of value and real earnings. At some price point I expect merger and acquisition activity and/or these type of buybacks. This is quite an enormous one since it saps up so much stock, but we know Potash (POT) CEO Bill Doyle has been in there buying stock all year even at these "bubble prices".
I knew Doyle would be peeved... here we go, after the bell
- Potash Corporation of Saskatchewan Inc. (PotashCorp) today announced that its Board of Directors has approved, subject to regulatory approval, an increase to the share repurchase program authorized in January 2008, raising the ceiling to approximately 10 percent of the public float or 31.5 million of the company's issued and outstanding common shares.
- This will allow PotashCorp to repurchase and cancel by January 30, 2009 up to an additional 15.68 million, or approximately 5 percent, of the company's common shares, over and above the initial maximum of 15.82 million shares
- Through periodic open-market transactions at prevailing market prices and the recent completion of private-agreement purchases, the repurchase and cancellation of the previously authorized 15.82 million shares has been fully completed.
- "We currently have an opportunity to use our strong cash flow to re-invest in the world's best potash assets - our own company - at an attractive price," said Bill Doyle, PotashCorp President and Chief Executive Officer. "We believe our shares are significantly undervalued versus our long-term potential. By buying back low-priced shares, we will strengthen our company for the future and reward our long term shareholders."
They've also declared a quarterly dividend I wrote earlier today
For a company like Potash, I've said once their hyper growth stage is over they are going to turn into a cash cow machine - spinning off dividends left and right as I truly believe even when their new supply comes on in 2011! (not next year, not the year after) there will still be a hightened demand for potash and new higher level of prices. Not that it matters to institutional money whose time frame is "next week at the longest"
There is still a lot of money needed for expansion plans over the next 5 years so I didn't really expect dividends already, but this is one CEO who will react when his stock (in his mind) is unfairly hit...
- Potash Corporation of Saskatchewan Inc. announced today that its Board of Directors has declared a quarterly dividend of US $0.10 per share payable November 10, 2008 to shareholders of record October 20, 2008.
Long Potash in fund; no personal position
3 comments:
Doyle to the hedgies:
'Who'se your Daddy Now, B h!!!'
That's why POT is my largest holding. In fact, POT and MOS (though AGU works also) are currently my only non-trade holdings.
So I'm hurting because of the hedge fund unwind but fundamentals always matter eventually.
Still, while there will likely be a bounce the leverage used by hedge funds is so large that I do not expect a rapid incline in stock price to reasonable levels unless a lot of new money flows in.And what if the bounce is fairly flat in the face of more Ospraies using this as a chance to unwind their positions (whewww... we were already starting to write our bankruptcy speeches... oh wait... we have the same leverage in all the other commodities so now all we need is for all the other companies to do the same)
Regarding APWR I think this is why the charts just cannot be ignored. We can never get inside the heads of the hedge funds but we can see the writing on the wall in the charts. Why did POT and MOS fall despite the earnings?
It turns out, in large part, that the hedgies were way overleveraged and a lot of the money in there was fake. They knew this. We did not. But the lower highs and lower lows on the charts spoke all. When a stock starts to move into the lower Bolling Band after a large run up, when any stock closes below the 200 or reaches major resistance like the 200 or 50 or previous support (double top on APWR for example) I'm just selling and assuming it will go down until it proves otherwise.
Also I am looking for shorting opportunities primarily and I always try to look at all of the proshares sector ETFs and other sector ETFs each day to see where the money may be going.
I've seen too many stocks just fall off a cliff after breaking through support. I've seen too many great companies have their stocks get trounced and terrible companies have the stocks make a run.
The only place that has as close to the complete picture, even if it makes no sense, are the charts. In this market I am starting to believe that this is the first place to check, along with what the hedgies might be doing, and third the fundamentals.
That may be what is working in this market... until it proves otherwise I am not here to go up against trillions of dollars... well maybe POT remains the exception.
Ah... a chance to write a bit of thoughts. Therapeutic when I have been doing science amost of the day...
Your previous post made some comments about how the market is becoming a game only for the larger funds rather than the smaller funds (much less retail investor).
How does this affect your thinking about starting a fund, not only in terms of breakeven but appropriate scale in terms of employees, assets. How does even a small firm get much of an edge?
Looking forward to your thoughts.
The nibble pilot fish continues to survive off the crumbs from the large successful sharks.
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