August 2017
August 2017
Recent dry weather conditions in the United States have weighed on global agricultural stocks, providing us with an opportunity to add a small position in agricultural specialist Nufarm Ltd (ASX:NUF) as the share price weakened.
Seasonal variances are part and parcel of investing in the agricultural sector, however our focus with Nufarm relates more to the material turnaround that CEO Greg Hunt has driven in the business.
Over several years, Hunt and his team have delivered on a multi-pronged $100m cost-saving initiative, featuring consolidation across its manufacturing footprint, procurement and supply chain savings, together with material improvements in cash management and return on equity.
Nufarm under Hunt is a well-focused business, diversified by product, region and market segment. With these positive changes placing the business in a far stronger position than several years ago, Nufarm is now positioned to take advantage of growth opportunities. These opportunities include participation in global M&A (opportunities arising from consolidation amongst larger global players), monetisation of Nufarm’s Omega-3 seed program or simply targeting further cost savings and improvements in cash collection. Given this optionality and with the share price reflecting some seasonal risk in the short term, we have begun to build a position in Nufarm.
Read our July 2017 portfolio reports