In mid July, $23 billion market cap fertilizer company Mosaic Co (NYSE:MOS), which provides both phosphate- and potash-based fertilizers, reported its financial results for the fiscal year ending in May 2013. The fiscal Q4 numbers showed a 5% decline in revenue versus a year earlier, which the company attributed to low demand in emerging markets (particularly India). Mosaic Co (NYSE:MOS) was able to reduce its costs more or less in line with revenue, however, and so with little change in net margins earnings were down at a similar rate. For the year as a whole the company recorded $4.42 in diluted earnings per share, as lower profits over the course of the entire FY were offset by a reduction in weighted average share count. The stock was down between 3 and 4% on the news even though EPS narrowly beat analyst expectations.
At its current price, Mosaic Co (NYSE:MOS) trades at 12 times trailing earnings; fertilizer companies, as well as many other stocks tied to agriculture, tend to carry earnings multiples in roughly the same range. Some analysts believe that a growing and more wealthy global population will lead to higher demand for agriculture in the long term, and combined with the market’s lukewarm attitude towards the industry it is a somewhat common investment theme. Of course, we’ve seen from Mosaic Co (NYSE:MOS)’s recent results that there has been negative growth recently, and even though this is supposed to be a long term trend it would be preferable to see some actual evidence that bulls’ predictions are playing out.
We track quarterly 13F filings from hundreds of hedge funds, using the included information to help us develop investment strategies; for example, we have discovered that the most popular small cap stocks among hedge funds outperform the S&P 500 by an average of 18 percentage points per year. Billionaire George Soros’s Soros Fund Management had more than doubled its stake in Mosaic Co (NYSE:MOS) during the first quarter of 2013, to a total of 1.6 million shares (check out more stocks Soros was buying). Our 13F database also shows SAC Capital Advisors, managed by billionaire Steve Cohen, with 1.5 million shares in its portfolio as of the end of March (find Cohen’s favorite stocks).
The closest peers for Mosaic Co (NYSE:MOS) are Potash Corp./Saskatchewan (USA) (NYSE:POT) and CF Industries Holdings, Inc. (NYSE:CF). Potash Corp. had grown its revenue and earnings at double-digit rates in the first quarter of 2013 from their levels a year ago, and so at least at that point was doing well.