Adding Bunge to the Portfolio
Our second pick for the Evergreen Portfolio will be Bunge. This diversified agribusiness is involved with the feeding of millions of people around the world, including much of Asia. Like our previous pick, KEP, this company provides a very basic thing, in this case lots and lots of food and foodstuffs.
Bunge is growing at 10% per year. It's trading at good multiples now, around 20. But this isn't a fad play, and it's not really even a short-term idea... This is a play on the growth of the human race, the fact that the world's population is going to double very soon, and that China will increasingly be requiring better and more food for its growing population.
On top of all this, Bunge is perhaps one of the lesser evils when it comes to Big Farming...
It's very active in the development of biofuels here in the U.S. Here's some information on their latest project in Illinois from our friends at Green Technolog:
"Gov. Blagojevich also announced today that Biofuels Company of America, LLC in Vermilion County is receiving about $4.8 million Opportunity Returns grants to construct a new $30 million biodiesel production facility in Danville. This project will create about 15 new jobs. Additionally, operation of this facility will help secure up to 100 existing jobs at an adjacent soybean crushing plant. This project is commonly known in the area by the name of one of its major investors, Bunge North America.
"This new plant, developed by Biofuels Company of America, LLC, as a partnership between Bunge North America and Biodiesel Investment Group, LLC, will be a 45 million gallon per year biodiesel production facility. In addition to the biodiesel fuel produced, the soybean oil the plant will use as feedstock is equivalent to about 30 million bushels of beans annually."
A colleague of mine who is now reseaching and writing from Australia, Dan Denning, recommended Bunge in his terrific book Bull Hunter. I'm recommending it now.
Buy Bunge (BG) at market. The stock is currently at $71.00, so we'll make that our entry point for this pick. We'll sell Bunge if it closes at 40% below any high it achieves from here on... And we'll reserve the right to sell at any point above that too.
Currently trading at: $71
Currently trading at: $22.78
Tuesday, December 26, 2006
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