Readings: YART, Ag Stocks, Short-selling
Yet another rouge trader -
- Times Online: Rogue London trader loses $120 million
Morgan Stanley yesterday became the latest financial services group to fall victim to a rogue trader as it admitted that it had suspended a credit trader in London for trying to hide losses of about $120 million (£61.3 million).
The markdown is thought to relate to short-term trading in credit index options that may date back as far as last year. The trades are believed be in CDX indices, complex derivatives used to hedge risk on credit investments such as bonds.
As if they didn’t have enough losses already.
- Business Week: Should You Bet the Farm on Ag Stocks?
The companies that may benefit most from the jump in crop prices are fertilizer makers such as Potash Corp. of Saskatchewan (POT) and Mosaic (MOS), as well as seed producers such as Monsanto (MON).
Monsanto, whose cash flows have risen sharply mostly because of sales of glyphosates, a type of herbicide used to kill weeds that choke crops, will probably start to raise glyphosate prices more sporadically than the once a year it has until now, as raw material costs, tariffs, and tighter competitor discipline permit.
. . . after enormous gains over the past few months, some of these ag stocks may be a little pricey for some investors. At 141.50, Monsanto shares are trading at more than 41 times projected earnings for fiscal 2008, while Potash is valued at 21 times fiscal 2008 estimated earnings.
Two of Amit Wadhwaney’s top five holdings in the $2.0 billion Third Avenue International Value Fund (TAVIX) he manages are companies that have survived droughts and are poised to gain more control of their local wheat markets, from farmers to end-customers.
- Economist: Nasty, brutish and short
“We appreciate that, asshole,” barked Enron’s chief executive, on a public conference call, to a suspected short-seller who had complained about the lack of a published balance sheet. Sometimes bears need even thicker skins. In 1995 Malaysia’s finance ministry reportedly proposed caning as a punishment for abusive shorting.
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