iBankCoin
18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
21,398 Blog Posts

Get Green and Do it Now

Let’s talk about Sociedad Quimica y Minera (ADR) [[SQM]] .

sqm

In 2008, due to the credit crisis, farmers around the world cut back on potash. For example, China reduced its appetite for potassium by a whopping 36%, sending the shares of Potash Corp./Saskatchewan (USA) [[POT]] , The Mosaic Company [[MOS]] and Intrepid Potash, Inc. [[IPI]] through the fucking floorboards. What did Sociedad Quimica y Minera (ADR) [[SQM]] do amidst the credit bust cycle? They made their largest investment in company history, by greatly expanding their potash division. In 2008, their potash division produced 186,000 tonnes. By 2013, they are projected to produce 1.5million. Holy fucking cow-tits!

It gets better.

potassium-chloride-unit-cell-3d-ionic

Farmers can’t milk the land for too much longer, without fucking themselves into the poorhouse. According to the laws of science, if you withhold potash (potassium chloride) from your farms for too long, you end up looking like the Soviet Union, circa early 1990’s. After 3 years of reduced potash, you will “enjoy” a 10-25% drop in yield. If you are brave enough to hold out for 5 years, your farm gets “ape raped” to the tune of 62% yield reduction.

In other words, Sociedad Quimica y Minera (ADR) [[SQM]] is in the sweet spot.

In addition to potassium chloride, Sociedad Quimica y Minera (ADR) [[SQM]] is the largest producer of potassium nitrate (49%), iodine (33%) and lithium (30%) in the world.

Let’s talk lithium.
lithium-nitrate-unit-cell-3d-vdw

Lithium is used in all sorts of shit, most notably your smartphones. Sociedad Quimica y Minera (ADR) [[SQM]] stands to benefit from the proliferation of worldwide mobile network expansion. With their surplus lithium, Sociedad Quimica y Minera (ADR) [[SQM]] decided to delve into the hybrid/electric car market. Oh yeah, electric cars use lithium batteries.

Whatever the fuck these green lunatics plan to do with CAFE standards, Sociedad Quimica y Minera (ADR) [[SQM]] stands to benefit, as they are the largest producer of lithium carbonate in the world. If none of this floats your Cadillac, SQM’s nitrate products are also used in solar electricity generation plants.

Where is the stock heading?

Well, it’s hard to tell, since most of the surprise stuff (hybrids, solar, potash) is not really baked into the estimates. Let’s just say, she’s going to $55 AND MORE.

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68 comments

  1. Skeptical

    On a good day fair value is 35

    Just a lot of people that think ‘lithium’ = profits.

    bubble market for overhyped names like JOYG, BUCY, CAT — I get the mining industry is expanding and lithium is needed… but SQM is just another hype stock. Doesn’t deserve to be this high on fundamentals…

    Have to laugh when the Fly starts getting all Graham and Doddish. Where was your analysis of FTK? You’re a momo player. Stick with momo. It’s working like a fuckin’ charm right now. SQM is going up because the market is retarded. End of story.

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    • Gunners

      i can’t believe this guy still has a moustache on his face…

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    • The Fly

      Go fuck a goat in a boat in a moat.

      I am not a momo guy. All of my ideas are carefully plotted. You view them as momo because they fucking work.

      What do I really care? Short SQM. See what happens to you.

      They are only increasing their potash division by 10x. No biggie. $35 you say? I am sure your analysis is second to none.

      Now fuck off , before I send you seaworthy.

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  2. Chuck Bennet

    nice piece.

    SQM makes me smile now. soon this will be leverage the same as POT and MOS. Talk to you when I see you at 50.00 mother F er

    regards

    chuck

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  3. BernieCornfeld

    Hoping for a pullback in SQM next week to add, partly because I am a cheapskate, and partyl because I am balls deep in Martha and Cummins. <—this post only makes sense here LOL

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  4. Mr. President

    BTFO yesterday + strong day today + closed at HOD = SQM is killing it.

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  5. KansasFarmer

    Meh,who needs potash.

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  6. TraderCaddy

    I did my +2% profits today the low stress (there is never NO stress) way by going in and out SMH on three round trips today.
    In cash and Monday we’ll do SMH (or KRE,XLF) again.
    Long or short, I don’t care. The indicators will speak.
    Kind of like the SMH etf whisperer.

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  7. Yogi & Boo Boo

    @Skeptical – I’m chuckling. Chuckling all the way to an early retirement.

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    • JakeGint

      The real chuckle is that even from a charting standpoint, he’s still wrong. Consolidation…. boom! does not equal $35.

      ______

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      • Yogi & Boo Boo

        Maybe he hasn’t looked at his charts for a few months… 🙂

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  8. Mr. President

    The name of this show is riduculous, but this is substantial, regarding FUQI. As if it wasn’t good enough already (it was):

    —“FUQI today is pleased to announce that the Company has recently launched a new product campaign promoting a series of gold jewelry products based on the popular Chinese animated cartoon figures, “Pleasant Goat and Big Big Wolf.” FUQI is the first jewelry company in China to obtain the exclusive rights to commercialize, manufacture, distribute, market and sell “Pleasant Goat and Big Big Wolf” jewelry products in mainland China.”—

    Now, this frickin’ goat and this silly wolf are BIG BUSINESS in China. Check Wikipedia:

    —“In January 2009, the first Pleasant Goat and Big Big Wolf movie – The Super Adventure was launched in China. It has broken the domestic box-office record for a Chinese animated film, collecting 30 million Yuan (US $4.39 million) during its opening weekend. On the first day of release alone, the movie made 8 million Yuan.

    According to Tuesday’s Beijing News, the weekend’s revenue was well ahead of the previous record holder for domestic animation, Storm Rider Clash of the Evils. The adaptation of the Storm Riders comic brought in 25 million Yuan in two weeks when it was released last summer.”

    Describing the Pleasant Goat movie as a “dark horse,” Zhao Jun, general manager of China Film South Cinema Circuit Co. Ltd., predicted the film would make at least 60 million Yuan in total box-office revenue.

    A manager of the Beijing-based Stellar International Cineplex said the movie theatre’s biggest hall, which had been scheduled to screen “Red Cliff II”, was reassigned to show “Pleasant Goat and Big Big Wolf: The Super Adventure” in order to meet popular demand.”—

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    • Mr. President

      And I just created a word: riduculous.

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      • JakeGint

        ROFLMAO.

        It was almost funnier.

        When I first read it I thought it said “PEASANT Goat” not “Pleasant.”

        Peasant Goat would’ve been perfect. Straight outta Romania.

        _______

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  9. zena

    The Fly ROCKS. He should tell Mrs Fly that JUST because of him my children got:
    new snowboards and boarding gear; Louis Vuitton travel bags!!; and many many other things for Christmas!!!!! Everything they asked for they got. JUST BECAUSE OF THE FLY!! They have never seen a spoiling like this year ALL BECAUSE OF THE FLY!!!!
    All I can say is my favorite thing in the whole world is seeing my children’s jaws drop with glee!!!!!
    Thank you!
    btw

    My girlfriend has two flies tatooed on the crack of her bottom. She is a beautiful red head with milk white skin. Can you imagine that!!!!!!!

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  10. ,masterpain

    Jake you grab that BO on FCX ? Also I grabbed a buch of SWC…………

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  11. ,masterpain

    Platinum ETF should juice things next week…

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  12. Sebastian Pelletier
    Sebastian Pelletier

    Talking green (other kind) I really start to like RZ charts. What do you think ??

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  13. Ssnowday

    Talking green, I really start to like RZ’s chart. What do you think?

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    • Bill

      Stay in school, kid

      technical analysis is for loosers [sic]

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    • Alavri40

      Ssnowday –

      Stay away from this one. They have 3.8M cash. 16.8M Acc Payable, and accrued liabilities of 15.5M. Their accumulated deficit totals 103.7M. In short, their debt to equity is 2,087. Management says that the sources of funding alone will be insufficient to execute their current business plan. They go on to say that the current economic environment makes it challenging to obtain the financing needed on terms acceptable. In addition, they just replaced their CEO. Fundamentally, this company is a piece of shit.

      From a chart play standpoint……really son, why bother? If you are gonna play the pennies, have a thesis – don’t rely on the charts. There isn’t any thesis here on this one. Geothermal hype is dead for now. Hell, even the pure play of ORA is shitting the shower. If you have limited funds and you want an energy play, try Fly’s FTK.

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  14. TraderCaddy

    And don’t forget all of the lithium the world will need to calm them down after drinking all of that high caffeine coffee from The Keurig.

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  15. eisensteisn

    Potash is potassium carbonate you dumb ass. What is your IQ again?

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  16. The Fly

    Higher than yours dumbass

    http://en.m.wikipedia.org/wiki/Potassium_chloride

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    • sandfleas

      Fly,
      I must point out a rather egregious error you made recently on Chuck’s lame commentary via The Peanut Galery. I am a “Distinguished Gentleman” of the PPT, not a woman, when I post on this site. I demand a retraction.

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    • eisensteisn

      That says “Muriate of potash” which I believe is potash after you pee on it.

      http://www.merriam-webster.com/dictionary/potash. Your definition may stand after a coaches challenge (equal to definition #2) but I expected better of the fly. Nevertheless, technically you may haver slunk in with KCl.

      It’s so hard to argue with someone of vastly superior intellect.

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      • sandfleas

        Eisensteisn, Potassium carbonate is a primary component of potash
        but it does not say, at least from what I have read, that potassium carbonate is used in making fertilizer,
        whereas potassium chloride is.
        It’s a bit confusing actually.

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        • TraderCaddy

          I would like to participate in this discussion but I had to cheat in Chemistry class (three times).

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          • sandfleas

            I bypassed Chemistry and took a fluff class called Entymology,
            where we walked across the street from school to an adjacent swamp, caught insects,
            stuck pins through them, placed them in a cigar box and called it Our Bug Collection.
            Hmmmm. Never pinned any sandfleas though.
            Yes, I attended an accredited high school in Massachusetts and even graduated from college.
            You only need Chemistry to mix drinks and hair color.

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  17. steve

    Why get involved w/an ADR when you don’t have to. Just by MOS instead.

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  18. kushzilla

    I love how The Fly just took a elephant sized shit on Einsteiseisenhausensheishenmeister.

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  19. Aristotle

    Oliver Wendell “Fly” Douglas has spoken! Now where the hell is Mr Haney?

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    • TraderCaddy

      Selling Sam Drucker and Uncle Joe casino tables for The Shady Rest Hotel, no doubt.

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  20. Alvari40

    FCX is the Metals/Mining play rolling over into earnings. Sure the company has a bit-o-debt compared to cash but they are under no pressure to pay it back until 2014. Until then, they will hoard cash. Their estimates going in to Q4 is based on Gold $1,000 and Copper $3.00. Both Gold and Copper are up 14% from this estimate, which will only serve to pad the top line going in to earnings. The CEO was almost giddly at the end of Q3 when he talked about the company position in relation to commodity prices looking forward at the end of year and beyond (no hedging here with this company – balls out). In addition, growth for FCX is dependent in great part upon forward growth in the BRIC countries, as well as other developing countries. The estimate from the beginning of 2009 was that 2010 was going to see world growth at about 1.9% growth. The IMF has upped this estimate to 3% at the end of ’09 – again increasing what will be forward looking estimates. Assuming 7.15 earnings for ’10, the stock would be trading at a 12 PE. The industry avg is approx 16 PE, which puts FCX at $115. The 16 PE is at the low end for FCX over the past 10 years. All I can say is that if you see Copper, Gold and Molybdinum (sic) creep up over the next week or so, you will also see FCX creep up into earnings.

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  21. mrkcbill

    Where’s The V.King?

    I think were going to see a wave of mergers…
    elevator up. .

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  22. scum bucket bitchez
    scum bucket bitchez

    Classic overproduction will drive down prices and use up resources faster but no-one cares, rape and plunder bitchez. Fly’s “investments” have the same duration as his sexual encounters so it’s all good, he’ll probably make a few bucks between now and planting season.

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  23. The Fly

    Not true. I’ve been in sqm for 6 mos or so. Potash demand is expected to be north of 80% in 2010. Look for negotiations with India in march to set the price for the potash market. My guess, much higher than the 350 set with china a month ago

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  24. mrkcbill

    Gold ripping…inflation is here.

    Earle to $90

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  25. Damon

    MOS needs a good ball-busting.

    I love this…

    Go SQM

    We shall conquer.

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