(List compiled by Eben Esterhuizen, CFA)
Let's talk about Jim Rodgers. He became a long term bull on commodities after a life changing trip through Asia that taught him about scarcity in a growing world. He's been preaching his views for years, and he's recently become focused on agricultural sector stocks.
Business Insider aptly pulled the following narration from a recent interview with ET NOW (see below) on Rodger's new interest:
I am thinking about buying agriculture right now. I am not thinking about buying base metals or gold or oil right now, but I am thinking of buying agriculture maybe this afternoon. That's where demand will come first. Probably precious metals second, then the rest of the commodities...
Agriculture is facing some very serious problems whether the world economy slows or not because we have shortages of everything. The inventories are very low. We even have shortages of farmers developing in many countries. The average age of farmers in America is 58, likewise Australia. In Japan, it is 66. You have hundreds of thousands of Indian farmers committing suicide. It has been such a terrible business. Higher suicide rate of any profession in the UK is in agriculture.
So farming has got serious problems facing it. We are going to see much much higher prices over the next decade. So I would buy agriculture soon. The others, I am more watching the world economy and the world markets before I step in.
Jim Rodgers may have a point. The number of people in the world has skyrocketed and that translates to more mouths to feed. The demand for grains, meats and dairy products also rises as citizens of developing nations become richer and crave richer diets.
Other strains on the industry in addition to the ones Rodger mentions above include the Ethanol fuel industry, which uses around 40% of US corn production. More demand for meat also means more demand for feeding grains that takes up viable farmland otherwise available for foods consumable by humans.
Just last month Kapitall reported that corn production fell short of the expected yield due to a string of natural disasters, floods, and heat waves. Corn prices have surged 70% since August 2010.
It seems Rodgers may be onto something. So, are there any other institutional investors that are bullish on the outlook for the agricultural sector?
For ideas, we collected data on institutional money flows, and identified a list of companies involved in agriculture that have seen significant inflows during the current quarter.
Big money managers think these agri-stocks have significant upside potential--do you?
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1. CF Industries Holdings, Inc. (CF): CF Industries Holdings, Inc., through its subsidiary, CF Industries, Inc., manufactures and distributes nitrogen and phosphate fertilizer products, serving agricultural and industrial customers worldwide. Net institutional purchases in the current quarter at 4.2M shares, which represents about 5.88% of the company's float of 71.44M shares.
2. Chiquita Brands International Inc. (CQB): Engages in the distribution and marketing of bananas and fresh produce under the Chiquita and other brand names worldwide. Net institutional purchases in the current quarter at 1.8M shares, which represents about 4.15% of the company's float of 43.39M shares.
3. The Scotts Miracle-Gro Co. (SMG): The Company Together With Its Subsidiaries Is Engaged In The Manufacture Of Lawn And Garden Care Products. Net institutional purchases in the current quarter at 2.1M shares, which represents about 3.58% of the company's float of 58.67M shares.
4. CVR Partners, LP Common Units r (UAN): Engages in the production of nitrogen fertilizers including ammonia and urea ammonium nitrate. Net institutional purchases in the current quarter at 10.0M shares, which represents about 13.77% of the company's float of 72.62M shares.