New Personal Buy: Feronia

By Travis Johnson, Stock Gumshoe, February 9, 2011

I’m not yet ready to provide much in the way of details about this company yet, and this is a small speculative position for me, but I wanted to let you know that I just bought some shares and warrants in Feronia, which owns an old palm oil plantation in the Democratic Republic of the Congo and is aggressively expanding into arable farming as well (thanks in part to the reverse merger which put their shares on the open market last Fall).

The company is not profitable and probably won’t be for a while, but the DRC is being thought of more and more as a potential “breadbasket” for Africa, with a great three-harvest climate and plenty of water that lead to comparisons with the Mato Grasso area of Brazil that has turned that country into an agribusiness powerhouse. I like the idea of being involved in early agribusiness expansion in new areas, turning underutilized land into efficient large scale farms to feed a growing population (some of my other investments, including Vostok Nafta and Sprott Resource, also play to this trend to a limited degree), and in this case I think it’s of considerable help that they already have a mature palm oil plantation and processing facilities, along with a local workforce and some transport infrastructure.

I’m thinking of writing up a few of these microcap budding agribusinesses for you in the weeks ahead as I become more familiar and comfortable with them so I’ll probably get into detail later if I continue to like what I see, but since I promise to keep you up to date on my portfolio there’s the news today: I now own a piece of Feronia. It trades on the Venture exchange in Canada at FRN and on the pink sheets at FRNFF, and if you decide to look into it yourself do be careful — the company is absolutely tiny with a market cap well under $100 million, it is brand new to the markets, and has been quite volatile — it has doubled just over the last two months or so, and I have no idea whether that momentum will be sustained.

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