Cosan Management Executing Through Trying Times And A Big Buyback Supports The U.S. Shares

Cosan Limited (CZZ) shares have continued to perform since my last update, rising almost 20% as the underlying companies continue to execute well in a challenging environment in Brazil and as management shows it’s willing to aggressively buy back shares when there’s a significant gap between Cosan Ltd. and the underlying value of Cosan SA (CSAN3.SA) and Rumo SA (RAIL3.SA).

I don’t see much reason for near-term optimism on the sugar or ethanol markets, and African swine fever is likely to continue pressuring Chinese demand for soy, but Cosan SA should still generate respectable free cash flow through this downturn due to its Comgas gas utility operations, and management has clearly shown they will support Cosan Ltd. through buybacks. The upside in Cosan Ltd. doesn’t look so exciting now, but I continue to believe this is a well-run conglomerate leveraged to economic growth in Brazil, and it would definitely be a name to reconsider at a lower level.

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Cosan Management Executing Through Trying Times And A Big Buyback Supports The U.S. Shares