Terra, Terra, Terra

TRA announced their earnings this morning. They were very good (Terra Industries: 4Q profit more than doubles). Good enough that on this miserable Tuesday, the stock actually went up. I know there is a lot of debate on whether TRA has any competitive advantage, but they are certainly cheap. That is why CF (which also had great numbers after the bell) is trying to buy them.

TRA did make a mistake in that they have locked in (through futures) a chunk of their natural gas costs, so they are not enjoying the recent drop in NG prices. I hope they are locking in the new lows for later in 2009 and 2010.

On the year they made 6.74 per share and ended the year with about $1 billion in cash. That being said, I think I would welcome a buyout at a slightly higher price ($25 to $26?).

Funny, another stock of mine (a Jubak stock) had the same issue of locking in a high price. FSUMF, which is a miner of iron ore which primarily goes to China had locked in shipping rates. Since they were locked (and loaded) they have dropped about 80%, which needless to say puts FSUMF at a slight competitive disadvantage. At the same time, they were running low on cash. Apparantly they got one shipper to agree to lower rates in exchange for stock. Jubak says they may or may not make it, a high risk stock. But if they do make it, we're looking at a possible triple.

Now for some astonishing news. My MFI portfolio has passed the Russell 2000 value benchmark and is quickly closing in on the Russell 3000. Since Nov 21, I am up about 50%, while the broader market may be up 4 to 6%. Don't mistake catching the benchmarks with breaking even, they are down around 40%.

To end my ramble, I read a great book over the weekend, "The Richest Man in Babylon". It was written in 1925 and talks about the rules "to Fatten thy Purse". It basically pretends to have found tablets from Babylon pre-Christ that give instructions on handling debt, preserving capital, saving money, understanding risk etc. It was ironic reading it in view of today's financial fiasco (not to mention mine). Quite timely.