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Posts Tagged ‘uruguay’

Invest Like George Soros With This Commodity Stock

October 17th, 2012

Jared Cummans: George Soros is one of the biggest names in commodities, as he is largely known for his success running the Quantum Fund with Jim Rogers. In recent years, Soros has been something of a gold bug, making huge allocations to the SPDR Gold Trust (NYSEARCA:GLD). Read more…

Agriculture, Commodities, ETF

George Soros Just Spent $455 Million on These Two Stocks

June 3rd, 2011

George Soros Just Spent $455 Million on These Two Stocks

Billionaire investor George Soros and his team of advisors take a “top-down” approach. This means they seek out big, “macro” investing themes, and then work their way down to the best ways to play that theme. Every quarter, they adjust their stakes in a range of companies, either by loading up or pulling back, while also looking to enter a few new positions.

In the most recent quarter, Soros, through his financial services company Soros Fund Management, added two brand new positions to his portfolio. Each could be viewed as a proxy for major themes playing out in the global economy.

Here's why they're worth looking into…

Adecoagro (Nasdaq: AGRO)
This ticker symbol says it all. Adecoagro owns and operates nearly 40 massive farms in Brazil, Argentina and Uruguay, a region known for fertile and productive land. Indeed, agriculture has always been the leading export in Argentina, but it also now holds the top spot in Brazil's export economy. This isn't just a play on soybeans or wheat either. It's also a play on cotton, rice, sugar cane-based ethanol, dairy cows, coffee, sugar and other commodities. This all means Adecoagro's annual results aren't subject to the vagaries of volatile prices for any particular commodity, though it surely helps that just about all the items noted above have seen a surge in price in recent quarters.

For George Soros, his $330 million investment (of roughly 27 million shares) in Adecoagro is the perfect play for the ongoing global demographic changes that are taking place. As the global population continues to rise, the amount of unused arable land continues to shrink. In addition the growing middle classe in many emerging markets are consuming ever more calories on a per-capita basis.

Beyond the demographic appeal of South American agriculture, Soros has likely spotted three other reasons to own this stock. First, operating income appears set to rise nicely in the near-term, from $74 million in 2010 to more than $150 million this year, and to $200 million by 2013, according to one of Brazil's largest banks, Banco Itau. Second, high-quality agricultural land is becoming a scarce commodity as new cities pop up in formerly rural areas of South America and Asia. Soros likely anticipates solid appreciation potential in the land Adecoagro holds. Third, Adecoagro plans to aggressively ramp up its ethanol business. Unlike the U.S. production of corn-based ethanol, which needs the help of government subsidies, Brazil's sugar cane-based approach is considered to be more cost-effective and more environmentally sound. In a world of high oil prices, sugar cane-based ethanol is likely to see rising demand.

Adecoagro pulled off a $12 initial public offering (IPO) in late January, rose higher, but now trades right at the offering price. The main reason for the underwhelming post-IPO action is in the complex nature of the company's business. In effect, investors need to figure out a value for each distinct business group. For example, the ethanol business alone is likely worth about $1 billion, according to Banco Itau. The bank's analysts think shares deserve to trade up to $16 (implying a 30% gain) over the course of this year, and perhaps well higher down the road as the company's growth plans come into focus and its real estate holdings appreciate in value.

Look for Soros to hold this stock as a key long-term position for his eponymous investment fund. For the rest of us, Adecoagro provides a way to get into farming without getting down in the dirt, as I discussed in this article earlier this year. The bottom line is that farmland has been a solid investment for a long time and will likely remain so for many years to come.

Visteon (NYSE: VC)

One of the most stunning consequences of the recent global recession was the absolute implosion of demand for new cars and trucks. Many key auto makers and their key suppliers had been used to operating with lots of debt, so when the downturn hit and sales began to slide, they either had to cut costs drastically, seek government bailouts or file for bankruptcy, as was the case with General Motors (NYSE: GM) and Chrysler in 2009. Visteon, which is an auto-part maker and a Ford Motor (NYSE: F) spin-off, couldn't avoid the maelstrom and sought bankruptcy protection as well.

But that's beginning to look like ancient history now: Visteon went public once again last October (with a much cleaner balance sheet) and saw its shares rise from about $50 to $75 before a recent pullback down to $61. George Soros' firm established a new 2.1-million share position (worth about $125 million), presumably after the stock suffered a 20% drop in just two days in early March, after announcing a year-over-year decline in first-quarter sales and profits.

Commodities, Real Estate, Uncategorized

Sizzling Demand for Meat Drives China-Brazil Deals

May 1st, 2011

Rudy Martin

When Dilma Rousseff, Brazil’s new president, visited China recently, the business delegation travelling with her hammered out several deals. One of the success stories of the trip was the Brazilian meat production industry.

Here’s a quick roundup of the Latin American industries and three stocks that might also benefit from this.

China’s burgeoning population and rising wealth have increased demand for food which can only be met through imports at this stage of the country’s development.

Take a closer look at beef imports into China. China’s beef imports are expected to jump 38 percent to 55,000 metric tons (MT) in 2011 from 40,000 MT in 2010.

Where’s the beef?

It will come from Latin American nations, like Brazil and Uruguay which should benefit most from the higher beef imports needed by China. Until 2008, Argentina was among the world’s top beef exporters. However, now 80 percent of Argentina’s production stays domestically, due to Argentine government sanctions on beef exports. As a result, smaller regional peers such as Paraguay and Uruguay have been able to surge past that nation in beef exports.

China also needs pork. It accounts for 50 percent of global pork consumption. This year it will import 1 million MT of pork, an increase of 20 percent over 2010 levels.

Within the next four years, Brazil’s annual pork supply to China is expected to touch 200,000 MT (slightly under 40 percent of its total exports in 2010). With these new orders, China will be competing with Russia and Hong Kong which accounted for over 61 percent of Brazil’s pork exports in 2010.

And demand for pork and beef is growing in other areas too.

The European Union’s proposed free trade agreement with the Latin American trade block (MERCOSUR), will allow imports of various types of meat such as beef and pork, creating high-end opportunities for producers into Europe over the next few years.

But it may not take years for the effects to be felt. All this demand is likely to be putting upward pressure on global beef and pork prices and production soon.
Among the ADRs that might benefit are the following:

BRF Brasil Foods SA (NYSE:BRFS) emerges as a clear winner in this recent deal, given that the company accounts for 40 percent of Brazil’s pork exports. The company’s stock has been a trail blazer on the bourses, notching up a string of new 52-week highs in recent weeks.

Cresud Inc. (NASDAQ:CRESY) in the medium term. In addition to its Argentine operations it also owns 36 percent of Brasil Agro which uses the same agricultural land development model to create value in Brazil.

Chile’s Sociedad Quimica y Minera (NYSE: SQM), a major producer of plant-nutrients whose Latin American operation includes facilities in Brazil, Mexico, Peru and Ecuador, as well as Chile. Its products are also distributed throughout North America, Europe, the Middle East, Africa, Asia and Australia. Given that land prices are rising, productivity is becoming a more crucial element, so expect fertilizer prices to rise as well.

To put it in a nutshell, I believe that demand from China will dictate the fortunes of the beef and pork industry in Latin America in the near future. It also will create some profit-making opportunities for Latin stock investors.

Rudy Martin, editor of Emerging Market Winners, is widely recognized as an authority on stock and ETF investing. With more than 25 years of investing experience, Rudy started his investment career by co-managing a $2 billion private equity portfolio for Transamerica. He also served as an analyst for DeanWitter and Fidelity Investments, and research director of a quantitative research firm that is now part of TheStreet.com. Recently he has been providing his investment ideas directly to a select list of global hedge funds as Managing Director of Latin Capital Management, an institutional money management firm with more than $180 million in assets under management. For more information on Emerging Market Winners, click here.

Read more here:
Sizzling Demand for Meat Drives China-Brazil Deals

Commodities, ETF, Mutual Fund, Uncategorized

Sizzling Demand for Meat Drives China-Brazil Deals

May 1st, 2011

Rudy Martin

When Dilma Rousseff, Brazil’s new president, visited China recently, the business delegation travelling with her hammered out several deals. One of the success stories of the trip was the Brazilian meat production industry.

Here’s a quick roundup of the Latin American industries and three stocks that might also benefit from this.

China’s burgeoning population and rising wealth have increased demand for food which can only be met through imports at this stage of the country’s development.

Take a closer look at beef imports into China. China’s beef imports are expected to jump 38 percent to 55,000 metric tons (MT) in 2011 from 40,000 MT in 2010.

Where’s the beef?

It will come from Latin American nations, like Brazil and Uruguay which should benefit most from the higher beef imports needed by China. Until 2008, Argentina was among the world’s top beef exporters. However, now 80 percent of Argentina’s production stays domestically, due to Argentine government sanctions on beef exports. As a result, smaller regional peers such as Paraguay and Uruguay have been able to surge past that nation in beef exports.

China also needs pork. It accounts for 50 percent of global pork consumption. This year it will import 1 million MT of pork, an increase of 20 percent over 2010 levels.

Within the next four years, Brazil’s annual pork supply to China is expected to touch 200,000 MT (slightly under 40 percent of its total exports in 2010). With these new orders, China will be competing with Russia and Hong Kong which accounted for over 61 percent of Brazil’s pork exports in 2010.

And demand for pork and beef is growing in other areas too.

The European Union’s proposed free trade agreement with the Latin American trade block (MERCOSUR), will allow imports of various types of meat such as beef and pork, creating high-end opportunities for producers into Europe over the next few years.

But it may not take years for the effects to be felt. All this demand is likely to be putting upward pressure on global beef and pork prices and production soon.
Among the ADRs that might benefit are the following:

BRF Brasil Foods SA (NYSE:BRFS) emerges as a clear winner in this recent deal, given that the company accounts for 40 percent of Brazil’s pork exports. The company’s stock has been a trail blazer on the bourses, notching up a string of new 52-week highs in recent weeks.

Cresud Inc. (NASDAQ:CRESY) in the medium term. In addition to its Argentine operations it also owns 36 percent of Brasil Agro which uses the same agricultural land development model to create value in Brazil.

Chile’s Sociedad Quimica y Minera (NYSE: SQM), a major producer of plant-nutrients whose Latin American operation includes facilities in Brazil, Mexico, Peru and Ecuador, as well as Chile. Its products are also distributed throughout North America, Europe, the Middle East, Africa, Asia and Australia. Given that land prices are rising, productivity is becoming a more crucial element, so expect fertilizer prices to rise as well.

To put it in a nutshell, I believe that demand from China will dictate the fortunes of the beef and pork industry in Latin America in the near future. It also will create some profit-making opportunities for Latin stock investors.

Rudy Martin, editor of Emerging Market Winners, is widely recognized as an authority on stock and ETF investing. With more than 25 years of investing experience, Rudy started his investment career by co-managing a $2 billion private equity portfolio for Transamerica. He also served as an analyst for DeanWitter and Fidelity Investments, and research director of a quantitative research firm that is now part of TheStreet.com. Recently he has been providing his investment ideas directly to a select list of global hedge funds as Managing Director of Latin Capital Management, an institutional money management firm with more than $180 million in assets under management. For more information on Emerging Market Winners, click here.

Read more here:
Sizzling Demand for Meat Drives China-Brazil Deals

Commodities, ETF, Mutual Fund, Uncategorized

Birth of the Debt Culture

April 26th, 2011

Once US dollars ceased to be convertible into gold at the beginning of the 1970s, there was no longer any constraint on the amount of dollar-denominated debt that could be created by the Federal Reserve system or the Treasury Department, or, for that matter, the private sector. For the next decade, fear of inflation and the Fed’s still relatively tight control over the financial sector kept credit growth relatively constrained. Beginning in the early 1980s, however, a flood of imports into the United States began to profoundly affect the economy. By circumventing many of the domestic bottlenecks that had caused high rates of inflation, this influx kept prices in check. It also quickly created a large trade deficit that was funded by foreign capital inflows. Those inflows loosened credit conditions in the United States. As those changes were taking place, the deregulation of the banking industry was significantly reducing the Fed’s control over credit creation. When imports continued to surge, the stage was set for an explosion of credit creation.

Since the end of World War II, Washington had consistently pursued a policy of global trade liberalization. Five rounds of trade liberalization under the auspices of the General Agreement on Tariffs and Trade (GATT) had been successfully completed before the end of the 1960s. During that period the expansion of international trade occurred within the framework of the Bretton Woods system, which was structured to ensure that trade between nations balanced. It was only after the Bretton Woods system broke down in the early 1970s, therefore, that the global imbalance that eventually destabilized the world began to take shape.

The United States continued to promote international trade liberalization even after Bretton Woods collapsed. The Tokyo Round of GATT was completed in 1979, and the Uruguay Round in 1993. From the early 1980s, however, the United States’ trade policy underwent a very important change. At that time, American policymakers became willing to tolerate very large current account deficits for the first time. Until then, the economically orthodox view had been that trade must balance, or else, in the case of a trade deficit, the economy would suffer deflationary consequences as resources left the country to pay for that deficit. In the first half of the 1980s, however, it became clear that the United States could run very large trade deficits and finance them with dollar-denominated debt.

Policymakers in the Reagan Administration seem to have embraced this new post–Bretton Woods reality. Imports appeared to help keep domestic inflation in check by opening up foreign sources of supply. Moreover, Americans did believe that “free trade” ultimately worked to everyone’s advantage. Their mistake was to assume that the expansion of world trade would produce the same benefits within an international monetary system based on fiat money as it had within a system based on the gold standard.

Unlike the gold standard or the Bretton Woods system, however, the post–Bretton Woods international monetary system had no mechanism for preventing large and persistent trade imbalances. In the mid-1980s, the US current account deficit grew to 3.5 per cent of GDP; two decades later, following the entry of China and other low-wage countries into the global economy, the deficit reached 6.0 per cent of GDP.

By then, what was understood to be “free trade” had actually become something very different, debt-financed trade. The debt that financed that trade, and the imbalances that built up around the world because of it, destabilized the global economy. Ultimately, when that debt could not be repaid, the global financial sector spiraled into systemic crisis and international trade collapsed. Had the Bretton Woods system remained in place, with its corollary of balanced trade, the global economy would have expanded at a much slower pace over the past thirty years than it has done. On the other hand, the global economy would not now be teetering on the brink of a new great depression. The high rates of economic growth during the 1980s, the 1990s, and most of the 2000s were great while they lasted, just as the Roaring Twenties must have been. Now that the global economy that boom created has broken down, we may not know for decades whether the boom years were worth their eventual price. The Roaring Twenties were certainly not worth the price paid during the 1930s and ’40s.

Regards,

Richard Duncan
for The Daily Reckoning

P.S. To read more, please see The Corruption of Capitalism, Chapter 10: “America Doesn’t Work.”

Birth of the Debt Culture originally appeared in the Daily Reckoning. The Daily Reckoning recently featured articles on stagflation, best libertarian books, and QE2

.

Read more here:
Birth of the Debt Culture




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

WisdomTree Plans 3 New Active Bond ETFs

October 20th, 2010

WisdomTree Asset Management filed a preliminary prospectus on Oct 19th, for three new actively-managed ETFs that will bolster its fixed-income bond ETF line up even further. The firm first tested the fixed-income space in August of this year with the launch of the Emerging Markets Local Debt Fund (ELD: 53.45 +0.21%), the first actively-managed ETF focusing on emerging market debt. The launch saw a good amount of success with ELD having accumulated close to $350 million in investor assets at the time of writing.

Presumably encouraged by the traction that ELD gained, WisdomTree followed that up by filing for an actively-managed Brazil bond ETF, investing in Brazilian government and corporate bonds. Having tasted success in the broad emerging market bonds category, the natural next step is for more narrowed offerings focusing on specific regions and sectors. That is exactly the approach WisdomTree appears to be taking with the latest filing which is for 3 new funds – WisdomTree Asia Bond Fund, WisdomTree Latin America Bond Fund and WisdomTree EMEA Bond Fund.

These funds could be especially suitable for investors looking for more targeted exposure as each actively-managed ETF will be making investments in government and corporate debt issued in their respective regions. At the same time though, the regional focus would mean that these funds are not as diversified as ELD would be and would be more exposed to country specific risks. The managers will be looking to achieve income and capital appreciation. Expenses, ticker symbols and the sub-advisors for the funds have not yet been announced. Much like ELD, all three funds will focus on investing in local currency denominated debt, but it is still allowed to invest in USD-denominated securities. This means that investors will be getting two distinct exposures – first they will get exposed to the credit risk of the issuers in the respective regions, second they will get exposed to the currency risk of the respective regions. And with two sources of risks, also come two sources of returns that would otherwise not be available from USD-denominated investments. Investments will be made in both investment-grade and non investment-grade debt.

ETF

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