Today I sold off my remaining shares of ABB Grain, reluctantly.  This is a company that I still think has excellent assets, and solid potential for long term returns if Australia is able to stay out of drought for a couple years, but the market has continually disagreed with me.

There are some stocks that I’m willing to hold in larger declines because I consider them quite speculative, and they can easily go down 75% or up 200% in any given year — that’s not the case with ABB Grain … or at least, it shouldnt’ be.  This is one of the major barley malters in the world, feeding Asia seemingly unquenchable thirst for beer, and it has strong distribution and marketing relationships with farmers across Australia and (now) New Zealand — they sell the seed, make the loans, buy and ship the grain.  And recently, they’ve been approved to help break the former wheat export monopoly in a newly opened market.

So what’s wrong?  Well, partly weather — Australia is the dryest continent, and though the harvest was stronger this year there’s continuing fear about the future.  And partly the Australian dollar — this holding of mine is down about 25-30% in Australian dollars, but quite a bit more in US dollars.  I continue to think that the commodity currencies are likely to recover and beat the dollar over the next five years, but I’ve been wrong on that in the short term, too, as global fear has led to a flight to safety in the greenback.

With a company like this, that reports less often than I’d like (not many non-US stocks have the good ‘ol quarterly reporting requirement), it can feel like the lack of information for foreign shareholders is a significant disadvantage to folks in the country who may be more familiar with the day to day business.  I don’t know if that’s true in this case, or if I’ve just been too late to cut my losses, but in the face of a market that clearly disagrees with me about the value of ABB Grains assets and market position … I’ll just put this position in cash at the moment.

Which is probably a signal, you might note, that now’s the perfect buying opportunity.

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