Tuesday, April 21, 2015

Seeking Alpha: Leveraged To Changes In Argentina, Cresud Can Still Outperform

"You have attributed conditions to villainy that simply result from stupidity" (Robert Heinlein, Logic of Empire)

It is hard to imagine that Christina and Nestor Kirchner could have run Argentina's economy deeper into the ground if they tried, but the reality is that nationalization, protectionism, regulation, currency controls, and other ill-considered economic policies have seriously damaged Argentina's economy. And yet, I think there's an argument to be made that Cresud (NASDAQ:CRESY) can still make sense in an aggressive portfolio.

Cresud should benefit from a change in government later this year, particularly if various candidates follow through on their pledge to rebuild the economy in part around agriculture and pursue ag-friendlier policies (including reducing or eliminating export tariffs). If Argentina's economy does improve, I would expect Cresud to also benefit from a catch-up trade in the value of Argentina's farmland (which should be worth more than it is, given its relative productivity and access to transportation infrastructure). Last and not least, Cresud may be poised to benefit from a bottoming of the ag cycle. All of that said, a lot can still go wrong within Argentina and Cresud's sizable stake in IRSA (NYSE:IRS) means this is not just a pure ag play.

Follow this link for the full article:
Leveraged To Changes In Argentina, Cresud Can Still Outperform

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