This teaser is a very brief one, from Tom Dyson for his International Strategist newsletter. Dyson is known better to the Gumshoe faithful for his role as the progenitor of the 801(k) strategy that so many of you have found compelling, which was part of a teaser for his 12% Letter on income investing. He was previously described as the “lead researcher” for the International Strategist, perhaps he’s made it up to “editor” now, I don’t know.
So this, like the Commonwealth Shares idea, is an international investment. It’s also a stock we’ve seen before — here’s part of the teaser:
“Last week, I visited the construction site of the largest slaughterhouse in Latin America. This plant is in Lucas do Rio Verde, Brazil. Lucas is the perfect farming town.”
Why is it that no one ever sends the Gumshoe on these junkets? Apparently I need some more backing. Or 100,000 more subscribers (go spread the word, please! Do we need a phone tree?)
“This complex will ‘process’ 325,000 chickens and 3,500 pigs every day. Production is scheduled to start in the first half of this year … One of the mightiest food companies in the world owns this development.”
Dyson goes on to say that this company is “extraordinarily cheap” and he calls it a “pure play on world food demand.” You can find out the name of the company by subscribing to the International Strategist … or you can just read the next paragraph to find out that this company is:
Yep, a repeat — this one has been picked by several newsletter services. Very recently it was a Skousen pick, as I wrote about here, and before that it was a pick from, I think, either Hidden Gems or Global Gains over at the Motley Fool. And better yet, your friendly Gumshoe has owned shares in this one too, for a bit over a year.
This teaser isn’t all that sneaky, partly because it’s so short, but the one thing that might throw you off is the “Lucas do Rio Verde, Brazil” part — most investors talk about the region that this town is in when they make reference to the industry here, so you’re more likely to hear about Mato Grosso than you are Lucas do Rio Verde. Mato Grosso is the heart of Brazilian soybean country, and there was a fascinating story about it (which also mentions the new Sadia plant) in Fortune in January that’s worth a read if you’re interested in Brazilian agriculture.
Essentially, the soy boom is what’s driving development in this part of Brazil, and the consumers of soy are locating in this region to make the supply chain more efficient (that includes not just Sadia but also several other meatpackers like Perdigao and soy processors like Bunge).
Oh, and that “most efficient way to feed the world” bit? I suppose this is a very efficient meat producer, and the fact that they focus largely on poultry and secondarily on swine, and are building plants near where their feed is produced, means that they’re much more efficient than your average beef beef producer (poultry is nasty business, but certainly extremely efficient compared with ranching or raising larger animals).
But really, the efficient way to feed the world is for all of us to eat the soybeans and corn directly, not feed it to an animal and eat that animal. Efficient, but probably not so likely, given that the one constant when their standard of living improves is that people start eating more meat. Just a little quibble there without an intended moralistic bent, I’m an enthusiastic meat eater even as I realize it’s not a very efficient way to feed the masses. Mmmmmmm, chicken.
My opinion of Sadia hasn’t changed since I last mentioned them, nor has my position — I still own shares, and over the long run I’d like to add to my position, but I haven’t bought lately.