PotashCorp (POT.TO)

Prefers the diversification of Agrium (AGU-T). In the last year, they have far outperformed Potash. So much depends on how the International price is set, foreign demand, etc. They have huge transportation costs of delivering.

He would avoid it. There is a lot of pressure on the share price. A year ago the cartel fell apart and they can’t keep the price of Potash up. This is one of the leading operators in the world in Potash. It is not clear where pricing is going to level off.

Sold his holdings earlier in the year. Didn’t like the way things were rolling out. If anything, he would be more of a buyer than not, at this time. However, his premise is Growth and growth is not inherent in a lot of these companies. The agricultural sector has been slow and there have been crop price declines.

(Market Call Minute.) The commodity price remains challenged. During the last year there has been a 90% correlation between the stock and potash prices. Potash prices look like they should bottom next year, but it is going to be tough.

Looking at technicals, the chart is not looking great. Turning downwards below the 50, 100 and 200 day moving averages. Long-term, looking at the fertilizer space, it all makes sense. Population is growing and, diets are changing for the better, so fertilizers are needed. In the short term, emerging markets are pulling back from buying fertilizers. He has zero exposure to agricultural stocks at this time. 7.2% dividend yield.

Potash and the other fertilizer stocks can do well from late June until the end of the year. However, the real sweet spot is October and into the end of the year. If it is able to go above its current level that would actually be positive.

He is still favourably disposed to the industry longer-term as the world’s population becomes wealthier and eats better. The story is basically intact. Some new supply has come on and that has affected the price and put the group in the doldrums. There is not a lot of new activity in terms of new mines coming on stream. Eventually that bigger secular move towards a more well fed population is going to take hold again. Thinks you have to be looking out 3 years. Dividend yield of 7% might be a concern.

The long-term thesis for any fertilizer stock is the growth of protein demand from emerging markets. The problem is that everybody rushed to supply it, and now we are oversupplied. There has been a breakdown in price discipline. Good cash flow going forward. It is too early for this.

Doesn’t see a strong catalyst for right now. If you look at the potash market right now, it is oversupplied and will be oversupplied for another year. This stock is supported in a large part by its 7% dividend. If you want to buy it just for the dividend that is fine, but doesn’t think you will see much capital appreciation.

Agricultural plays tend to do well in the summer, but not this time. There have been tremendous commodity pressures. There is no technical reason to invest in these. We are not seeing strength accumulating during the period of seasonal strength.

Dividend over 7%. Given the global economy and reducing GDP growth, it has caused demand for potash to come down. He is not thrilled to jump into these names until we see a rebound in global GDP and in potash prices. He would be surprised if they cut the dividend at this point unless it gets to double digit.

It is premature to own this. The outlook for the product is not particularly strong, for at least the next couple of years.

The price of potash went to the sky and everyone started building potash mines. You were seeing a cartel and then it got split up and the price fell again. Prospects for the industry are not good. AGU-T is much better because they are vertically integrated.

Too levered to one commodity. He doesn’t like layering a position on one commodity going forward. This has tended to be a story where expectations for potash demand are here, and they always kind of miss what is expected. This seems to perennially disappoint investors. It’s a good cash flow story, so the dividend should be fine. Too many moving parts for him.

It is exposed to only the commodity and has no retail network like AGU-T. He is not compelled by the near term fundamentals.