PotashCorp (POT.TO)

He doesn’t own this, but does own Agrium (AGU-T), and they are going to have to show him whether to be part of that combined entity. Potash is a commodity and is a long term play on the price of the commodity. Whereas Agrium is mostly insulated from that with their retail operations. He would be careful about this one here. Maybe buy it when it really sells off.

Potash (POT-T) or Agrium (AGU-T), or wait? He would wait and let the dust settle. In general terms, it is a good idea. There will be a consolidation and there will be lots of savings and lots of synergies. What you don’t know is what the consolidated situation is going to look like, and how many shares you are going to get.

Her primary holding in this space is Agrium (AGU-T). You have to take a longer-term view of this sector. Arguably we are at the cyclical lows for potash. They are merging with Agrium, which will give shareholders a more defensive earnings profile via Agrium’s retail operations. When the potash cycle turns and starts to move up, this is going to be a very strong company.

(Market Call Minute.) This is in the takeover area, not the investment area, so he has no interest in this. It is pure gambling now.

They may merge with AGU-T. He would like to see it go through. He feels it is necessary. Return on capital has been declining for 5 years. It is a tough business. He would not be in it without the merger.

They cut their dividend in the summer, and it is very difficult from here to know what is going to happen. There are discussions on a merger with Agrium (AGU-T) at this time. A very difficult market to assess because there is a cartel that basically broke down, and there is overcapacity in the industry. He would be very cautious about the stock and industry overall. Dividend yield of 2.3% is more sustainable than it was.

There is a potential merger with Agrium (AGU-T), which is probably good for this company, but not so good for Agrium. This company has really struggled lately. A merger would create a behemoth and would probably get through regulatory scrutiny, but it will control roughly 62% of the potash production domestically and 30% of nitrogen and phosphate. It would essentially be a cartel. This is a response to weak prices and oversupply, particularly in the potash market. To really extract value, you are going to have to see layoffs.

(Market Call Minute.) This has been basing for a very, very long time. Eventually it is going to start moving higher, and he thinks it can move up quite nicely.

This has been very hard hit by conditions in the market. Prices have been very low for the commodity. They recently cut their dividend by 60%. The multiples going forward still look pretty high, but they are based on prices being at around current levels. He prefers Agrium (AGT-T).

This is a commodity, and this company is the purest in terms of what is available in Canada. There has been a lot of pressure on the commodity. The buying has been done once or twice a year. Big buys and the prices tend to get set and stay there. At this level, it might be interesting to look at. The commodity price has come down, they have cut the guidance, and they have cut the dividend. Anywhere at these levels, you could look potentially to add to it, but he would do it with little bites at a time.

(Market Call Minute.) We have likely seen the worst in terms of potash pricing, which was declining. It might be a while before they actually start recovering strongly.

He bought this recently. Fundamentals are crummy, but it reminds him of buying energy stocks back in February when everybody hated the industry. Feels the stock has come down for such a long period of time, and it is dominant in the industry. Pricing has stabilized. Doesn’t expect there will be a dramatic recovery, but feels the worst may be over.

He has been watching it since it peaked out at 12 times book and it has still to reach its usual lows prior to the run up. He would not buy yet. It is too early. Don’t be in it for any length of time. Below $19.5 he would short it.

His view is that the potash market is a bit broken. There are a number of new projects coming online, which are long dated. Thinks there is still more downside to potash prices going into 2017.

(Market Call Minute.) Thinks this is an “add” at some point in the future, but there is a risk to the dividend. Wait to see how this plays out. However, it is a company that he likes long-term.