My business was conducted slowly, over the course of a three hour meeting, which began at high noon. After catching the open and seeing my positions getting shelled, I just assumed it as well.

However, upon my return, I’m glad to find this market has turned about face. And what’s more, I ran ahead, thanks to gains in TLP, AWK, and BG. It’s good to see my new work doing – well – work. I am absolutely jovial when in the right and I hope to stay that way.

A note on TLP: Transmontaigne Partners is now my largest position by value, with MGM coming in at a close second. My consolidation of NRP brings it in the running for third, at just barely larger allocations than AWK and BG.

But back to TLP. Although a remnant of my old positions, I am encouraged to keep it. The reasoning is simple, as TLP is a transportation company which situates itself throughout the United States. And, they specialize in shipping bulk commodities, especially volatile cargo, like what we find with petroleum products. So, it follows that increases in the price of commodities will give room for businesses like TLP to demand higher shipping rates.

Combine that with this: the U.S. is presently experiencing some of the worst weather on record. This means price increases accross the country in addition to what has transpired already. It also means local business, which would have otherwise supplied for that demand, is probably operating below capacity. Those price increases will therefore be tantalizing to distant businesses, who can make a killing compared to their own local markets.

And how will they get their products to said destinations?

Answer: TLP’s transportation lines.

So for the meantime, TLP stays on the books, as is. However, even though I want to keep it around, once it goes above $40, I’ll be scaling it back, similar as I did to NRP today.

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Sold VZ for $36.12 per share, from the $27-28.50 range between May and July of last year.

A recent report came out which dampens the prospects of new VZ iPhone users, basically suggesting that VZ is better with calls, but the full potential of the iPhone still cannot be accessed with the VZ network.

Since the transition to the VZ network was going to take years anyway, I just don’t like the prospects of VZ ramping up past $40 any time soon, especially not in the wake of this slam piece. And since that represents a mere 10% gain from these levels, I’m not interested in waiting any longer.

This market has spoiled me; there was a time when I’d be ecstatic to sit around and wait for a 10% gap, but with food riots, housing prices sliding, and cheap ass utilities abounding, I have better use for the money right now.

That being said, VZ is still the superior network, is already implementing its 5G infrastructure, and will continue to outperform as they appear to be the only network dedicated to…making a better network. While the other assholes fist pump themselves in mindless commercials talking about how great they are, VZ will continue to define themselves by actually being great. And with a nice dividend, that makes VZ an excellent stow away position for the IRA or 401K.

Just not a good hold for my portfolio, which is decidedely more aggresive, and not interested in waiting a decade to squeeze 40-60% out of this massive (and decidedly well priced) company.

On another note; what the fuck is wrong with you iPhone users? You have to be the most ostentatious choch-bags on the face of the planet. Has it ever crossed your minds that no network can adequately handle your information drawdown if you’re in the middle of a call while simultaneously attempting to serf the internet for pornography and trying to solve for the 1 googolplexth digit of the golden ratio?

I’m not a fan of T, but if I were them, I’d be glad to be rid of some of you.

Update: I also sold out of 2/5 of my NRP position, on the desire to raise money. Coal is sweet, but I’m thinking that coal companies are getting a little expensive. I intend to take an in depth look at them later on. Also, thanks to massive gains over the last two years, this was my largest position, followed by TLP and MGM.

I wanted to scale back out a little bit, so that it wasn’t such a large influence on my portfolio. Combined with the sale of VZ, I have a healthy 13% cash position. I’ll look to redeploy those funds soon.

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Parden me for being quiet but my house has been converted to a wintery tomb, overnight as if by gay magic. And, the blessings were not stopped there, as the part of the freezing weather felt need to take up residence in my nasal cavity.

So here I am, feeling like shit and not the least bit interested in working.

Sadly, in matters unrelated I have at least two hours of labor which must be done today, and a second pressing matter to attend to tomorrow.

So don’t wait up…the last part or two in my new allocation planning will be on hold for a day or so, and the Talir Index will now be unveiled over the weekend.

Yesterday, I purchased BG, if you missed the memo. The play, along with other grain moves, shall do wonders thanks to global consumption increases, commodity prices soaring higher, and global destabilization crushing foreign economies and agriculture operations. Because of the unexpected nature of the riots, you want to have a operation with a distribution and storage network; those are the best situated to take advantage of cost spikes.

In buying BG, I went long with margin again. I will be scaling out of other positions to compensate for this, plus a little extra to make room for an REIT or two.

Now I’m going to make a Reuben and boil my head. Hope you feel better than I.

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This post shall address the state of global wheat prices and how I intend to take advantage of them.

Firstly, let’s look at some global data to get a feel for the market.

This graph breaks out global wheat production in million metric tons or million hectares, versus its domestic disappearance (consumption, processing, spoiling, etc.) and ending stocks:

(You can get this data at http://www.ers.usda.gov/data/wheat/WheatYearbook.aspx)

Incidentally, global exports of wheat are coming off of all time highs of 2008 and 2009, and 2010 numbers were still well above 2007’s export data.

As a side note, notice how the production yield has been slowly stone stepping higher, despite the fact that harvest area remains relatively unchanged? That is a direct bit of evidence as to what the Fly was talking about earlier, with regards to potash producers being at work.

Meanwhile, wheat futures are soaring higher, as indicated by the front month spot price:

Needless to say, such an opportunity for growers and supply chains cannot be ignored.

I turn my attention then to Bunge Ltd. (BG), a company that specializes in South American agricultural operations, including wheat harvesting.
At first glance, I thought I must be mistaken, as BG was holding a book value I would put at around $77, as of September. However, I re-ran the numbers and cross checked them with The PPT. Some of the specific convertibility issues make it difficult to pinpoint the exact number, but it is generally correct. So how is it that this company is now trading at a discount to its value? This actually worried me, so I began reading the entire SEC document on the company.

There is presently a grain strike in Argentina which is crippling a part of BG’s operations. They are unable to ship products through Argentina ports, which I would assume has something to do with this. I hate Argentina, and the worthless Fernandez family. However, as long as the issue gets resolved, their disgruntled countrymen could well be providing the perfect entry point.

I couldn’t find anything in the filing that really distressed me. No ominous writing or similar, except for the fact that the company is trading so cheaply. There are several risk factors with the business, however, stemming from their extensive use of derivatives and being sensitive to changes between the Brazilian real and US dollar.

In general, the dollar weakening against the real has given the company a huge boost.

BG has a well managed balance sheet, and they break down their business into five basic segments: Agribusiness, Sugar & Bio-energy, Fertilizer, Edible Oil, and Milling. Agribusiness is most pertinent to this discussion, followed by milling.

Although not of interest to me, their Sugar & Bio-energy division has also been growing by leaps and bounds, probably thanks to Brazilian clean energy efforts. I hate that shit, but who can scoff at free money?

Meanwhile, the company has also been engaging in the act of extinguishing debt earlier than expiration, an act which I fully support. Their debt appears to be well managed and under control.

There are some other issues in the works, like a Brazilian tax law change. However, there is nothing so obviously terrible that it stands out at me in the reports. I am not necessarily ecstatic with the amount of derivatives they employ (they could very well end up APCing themselves and miss out on much of the profits from higher grain values) but in general, given the environment I’m seeing, I can get over it.

Actually, the biggest question mark is under the segment of their operations called Moema. It is an extension of the Sugar & Bio-energy division, and seems to be a sugarcane operation. The problem with it is two parts:
1. The company claims the thing is a gigantic target for lawsuits, which spells prior labor law violations, in my eyes, knowing what it is and that it has been acquired.
2. The operation was completely opaque, and no financial information apart from general asset and liability assessment is provided. However, since I deduct goodwill from my analysis anyway, the core of the conclusion is held in tact.

Therefore, I will be moving to add BG to my portfolio, likely sometime today.

Incidentally, other grain operations should also do well in the current climate, and I encourage others to investigate and pursue those venues, as well as this one, before making the purchase.

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This will be a succession of posts I intend on printing out, over the next 48 hours.  The times call for a complete reassessment of the present, and that means I need to determine the top sectors for allocating funds to.

This is not being done because I think for some reason the price of commodities or precious metals are suddenly going to collapse 50%.  On the contrary, I think that for the foreseeable future they will be in a sustained move up.

However, I’m not just interested in making money.  I’m interested in making as much money for as little effort as possible.

I’ve juiced the commodity move with such precision that anything less than 60% annual moves in my commodity names will be a drag on my performance, all else being equal, and the exposure to risk in commodities as measured by threshold (I’ll elaborate later) is unacceptable and limits new investments I’m willing to make. 

As I see it, three sectors at present command the best chance for massive gains:

1. Real Estate – specifically Residential REITs which specialize in rental units and multi-family purposes.
2. Agriculture Producers – I am completely fixated on wheat growers and storage/distribution networks.
3. Utilities – they are far too cheap for the security they offer.

I’ve already begun this process by introducing the utility purchase.  I’ll be moving quickly to analyze the following spaces and make my allocation adjustments.

For Agriculture, I’m looking at ADM and BG.

For REITs, I’ve got a much larger list: AEC, AIV, BRE, CLP, CPT, ESS, and SNH, thus far.

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The crisis in Egypt has brought to front and center the strategic importance of the Suez Canal, which purportedly carries 8-10% of the world’s wealth as well as anywhere from 5-40% of all oil produced world wide, depending on which jackass on the internet you ask.  Needless to say, the prospect for a full blown panic is ripe with these conditions, where no one is bothering to double check how many of which good(s) actually go through this waterway.

I have already stumbled on blogs stating as matter of fact that even temporarily closing the Suez Canal would bring about global pandemonium and the end of civilization.

Very level headed, of course…

Incidentally, I am not interested in what the exact statistics are, as they are not important; the threat of the Suez Canal being shut down is already overblown, even in its infant stages.

As obscure sources begin trumpeting the dangers of global trade being brought to its knees, leaving the entire world decimated in the wake of this one country’s problems, I want you to remember this:

When an event is going to affect the prosperity of entire continents, you can expect someone to do something about it.

So whether 1% or 100% of global oil produced passes through the canal, it doesn’t concern me, as I can pretty well assume the canal wouldn’t be closed for very long.

I’ve been looking through data of the most obvious sector which should be affected by such a panic; the maritime shippers.

Right now, some shippers have experienced mini rallies thanks to speculation of higher tanker rates fueled by a sense of urgency…which is ironically leading to more urgency. 

However, most of these names were hit Friday and many of them were already in consolidation before January 25.  In my opinion, a shutdown of the canal should trigger losses in shippers with routes that go through it, as they have to take more extended and costly pathways and ultimately change their logistic models.  These increased costs and delays would likely have to be absorbed by the shippers themselves, although if manufacturers and suppliers keep sending rates higher this may not be the case.

I am assembling a list of prospective buys, which will be a guideline should fear of a constriction of global trade start tanking shippers.  If shippers start rallying hard, then I’m not interested.

As of right now, that list contains CPLP, NMM, DAC, DRYS, TK, and VLCCF.  Literally, I just grabbed those names at first sight, off The PPT; some of them I have owned or have wanted to own before.  They will make a good starting point and I will begin filtering the list, or adding new names, as/if developments start sinking the companies. 

TK and VLCCF probably interest me the most, as I remember looking at them during the financial crisis, thinking I could just bide my time and buy in later.  That was, obviously, a mistake.  CPLP is also intriguing, with a very young fleet.

Basically, I’m looking for a run down so that I can buy in and then wait for U.S. warships to enter the area and set the record straight.  Just picture a U.S. naval carrier cruising in the Mediterranean right off the coast of Egypt, perhaps accompanied by an armada of warships, and you’ll see where my head’s at.

In the second obvious sector to be affected – commodities – I will be taking a pass.  The oil trade frightens me, as I will get into later, I have extensive exposure to the best substitute – coal, and I don’t like the metals vis-à-vis Asia/China on crack and maybe overheating.

Besides just the Middle East, the conditions seem right for contraction.  People should be starting to ask themselves what might happen if states begin taking their obligations to court for restructuring, or what a Republican Congress demanding spending cuts means for the stock market leaders.  And, they should be remembering that there are some things Ben Bernanke cannot ease.

Things like mindless, bloody riots.

I view the market at a crossroads, with a number of high level events looming on the horizon, and will not be surprised if we continue much lower.  I will therefore conduct myself with much reservation when it comes to making additional purchases.

I am all long with a negligible cash position, and lots of relatively cheap credit.  My positions are MGM, TLP, NRP, VZ, AWK, and physical silver.

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