In the summer of 2013, I wrote about three South American agriculture companies as Top Ideas. Two of the three, Cresud (NASDAQ:CRESY) and Adecoagro (NYSE:AGRO), have done quite well since then, despite ongoing problems in Argentina. The third, SLC Agricola (OTCPK:SLCJY), has been a skunk
- declining about 25% on a triple whammy of bearish ag sentiment,
bearish Brazilian land value sentiment, and the depreciation of the
Brazilian real (the local currency shares are up 4% over the same time).
At
the risk of doubling down on a bad call, I think this reaction is
overdone, and that there is some meaningful opportunity here. Calling a
bottom in corn, cotton, and soybeans is risky, at best, and I do think
it is too much to hope that Brazil's farmland will continue to
appreciate at strong double-digit rates. Even so, I think SLC Agricola
is getting too little credit for being a very efficient operator with
significant underlying land value and the potential to leverage ongoing
improvements in Brazilian's transportation infrastructure.
Continue here for more:
SLC Agricola Whammied Well Below Fair Value
No comments:
Post a Comment