The bloom is definitely off of the ag bull market, as lower crop
prices have soured investors on seed, ag equipment, and fertilizer
companies. None of that is positive for Allana Potash (OTCPK:OTCPK:ALLRF,
(AAA.TO)), nor is the fact that potash pricing remains stuck around
$350 per ton. These shares have continued to weaken since the company
announced a major tie-up with Israel Chemicals (OTCPK:ISCHY) and since my last piece. While the Global X Fertilizers/Potash ETF (NYSEARCA:SOIL) is down about 2% since my mid-March update on Allana, the company's shares themselves are down another 20% or so.
Granting
that investors were disappointed in the terms of alliance with ICL, and
granting that there is still more dilution likely on the way (as the
company still needs to raise debt, and probably equity, to fund its
Danakhil project), I continue to believe these shares are undervalued.
By no means is Allana anything other than a high-risk investment, but
ICL appears committed to the project, and I believe the current price
doesn't give much credit to the value of the project.
While I
generally recommend avoiding "F-type" ADRs and buying shares on local
exchanges when possible, Allana's ADRs are more liquid than most
unsponsored ADRs. Even so, I'd advise owning the Toronto-listed shares
when/where that is an option.
Read the full article here:
Allana Potash Continues To Drift Amidst Ag Malaise
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