Comments on Fund My Mutual Fund: Bookkeeping: Beginning Starter Position in Intrepi...

Understanding the desire to create an analytical f...

2008-06-04T12:58:00.000-04:00

Understanding the desire to create an analytical following by analyzing the numbers in the press, you may also want to consider the non-numbers in your investment contemplation.

As you know the stock prices tend to move up on contemplation of good news and down on the announcements.

Currently there are many times the number of people in China, India and other rising economies of the world as in the USA and European centers of influence, whose populace have raising expectations of a better nutritional diet. (Well documented)

Crop yield curves on existing and newer, marginal lands are not in their favor. (Also well documented) After centuries, certainly decades of under fertilization of their over used farm lands, these countries are now having to expand farming into marginal lands. There is a certain amount of catch up on fertilization, which is need to feed their people.

With potash companies controlling the currently available supply and raising demand, the price increases will rule the day for at least the next 3 to 5 years.

Your analysis, based upon sound investment principals of outdated media reports will cause you to under invest in an area in which there is a market paradigm shift or major market move taking place.

Additionally, with the current political shift in Congress, which believes they can decide how much profit non-governmental companies can make, you may want to consider non-USA investments in this commodity, just to hedge your bets.

On a relative basis to MOS and POT, how does that ...

2008-06-02T22:39:00.000-04:00

On a relative basis to MOS and POT, how does that compare? It's not like after 1 year, any company is worse off than any other, and its the volumes that impact the earnings.

My bad, the EPS increase is annual rather than qua...

2008-06-02T21:28:00.000-04:00

My bad, the EPS increase is annual rather than quarterly. Then the estimated $0.07 EPS increase does match with other information provided by the company.

Thanks.

Hi Gary,I am not following your path of calculatio...

2008-06-02T20:02:00.000-04:00

Hi Gary,

I am not following your path of calculation. The Langbeinite is not part of it, and remember this is a full year (not quarterly)

So (roughly) take 900K tons x $10 = $9M extra for each $10 price increase

without accounting for taxes and assuming its a direct flow through (no gross margin hit) you divide $9M by 75M shares and you get $0.12 EPS increase

Some portion of that does not flow directly to the bottom line since it would be eaten by gross margin

and some portion is eaten by taxes

So this assumes 5 of the 12 cents is eaten by cost of goods, and some portion by taxes, seems reasonable to me.
Thanks

I wonder how the company estimates $0.07 EPS for e...

2008-06-02T19:44:00.000-04:00

I wonder how the company estimates $0.07 EPS for every $10/ton increase of potash. The number does not match. The company produces about 225K ton of potash and 57K tons of Langbeinite per quarter, and it has slightly over 75m diluted shares. The tax rate is about 38%. Under the best scenario, every $10/ton increase will amount to less than 2.5 cents EPS increase. [ (0.225+0.057)*(1-38%)/75=$0.023 ]