AG stocks surge on Potash Bid

Last Tuesday BHP Billiton announced an unsolicited bid for POTASH, for which the market promptly took POT 25% higher that day and has continued higher throughout the week. Firstly, this bid for Potash grossly misvalues Potash's 400 years worth of reserves and only gives value towards current earnings and not the insitu resource that will feed the world for centuries to come.

BHP Billiton is trying to take advantage of a pricing anomaly in this industry and buying centuries of reserves for practically nothing. BHP understands this and I believe will make another offer closer to the $200 range which will still represent very good value for POT as far as BHP is concerned.

What this all means for the industry is that while takeover speculation for POT is ripe and hot... it will continue to light a fire in the industry and give it momentum. Compile that with all the drought in the world, the natural disasters and producers refusing to buy Potash for the last 2 years has all complied into the perfect storm to push Ag stocks to all time highs this winter as a shortage of food becomes apparent this fall and winter.

A couple pennies that one could take advantage of the momentum are BOE.V and AMZ.V... Both are potential Potash operations. Another interesting company that may breakout of a downtrend is COIN. They produce organic fertilizers and has been in a terrible downtrend since spring of '08 from $12 and is currently sitting close to a year low at .47. It may be time for this company to reverse its fortunes or at least a relief rally.

Ags look like a great place to park some capital this fall as the world starves due to food shortages this year. I made up a portfolio of selected Ag stocks and added them the day BHP announced takeover intentions to track what the industry does over the coming months.