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Real Client Managed Portfolio

Real Client Managed Portfolio. Presented on October 23 rd , 2012 Brian Mulvihill Leah Xu Mengyu Sun. RCMP ’ s Mosaic Holdings. December 18 th , 2009 Bought 200 Shares at $55.00 for total price of $11,000 October 22 rd , 2012 Close Price at $54.23 Unrealized Gain of $52.00 (0.48%).

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Real Client Managed Portfolio

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  1. Real Client Managed Portfolio Presented on October 23rd, 2012 Brian Mulvihill Leah Xu Mengyu Sun

  2. RCMP’s Mosaic Holdings • December 18th, 2009 • Bought 200 Shares at $55.00 for total price of $11,000 • October 22rd, 2012 • Close Price at $54.23 • Unrealized Gain of • $52.00 (0.48%)

  3. Agenda

  4. Agricultural Chemical Industry: Overview • The US agricultural chemicals industry includes: • 700 companies • Combined annual revenue of about $32 billion Source: Bloomberg

  5. Agricultural Chemical Industry: Products Sources: Potash Corp

  6. Agricultural Chemical Industry: Porter’s Five Forces

  7. Agricultural Chemical Industry: Factors Fertilizers Crops Raw Materials Population

  8. Industry Factors—Raw Materials Fertilizers Crops Raw Materials Population ` • Key raw material inputs • Ammonia: Natural Gas • Sulfur: Co-product of oil refining • Investments in sulfur transportation assets • Phosphate rock • Risks • Volatile pricing • Alternative transportation • Terminating facilities  insufficient capacity

  9. Industry Factors—Crops Average annual growth rate: 1.97% • Sources: Bloomberg

  10. Macroeconomic Factors—Population

  11. Macroeconomic Factors—Population “This is a basic problem, to feed 6.6 billion people. Without chemical fertilizer, forget it. The game is over” Dr. Norman Borlaug Nobel Peace Prize Winner

  12. Mosaic Overview Formed in 2004 by the combination of IMC Global and Cargill’s fertilizer business Leading producer of primary crop nutrients phosphate and potash Serves customers in more than 40 countries Vertically integrated • Mining  Production  Distribution

  13. Segments Two Primary Segments Phosphate Potash

  14. Phosphate Segment

  15. Potash Segment

  16. Economies of Scale & Global Presence Potash Phosphate • Largest integrated phosphate producer in the world • Production (Fiscal 2012) • 58% N. American • 13% Global • Third largest producer of Potash globally • Production (Fiscal 2012) • 37% N. American • 13% Global Vertical Integration: • International sales offices and distribution centers • Largest buyers with growing demand: Brazil, China and India Source: Global Presence Map, Mosaic Co., October 2012, p. 2 Source: Form 10-K, Mosaic Co., FY 2012, Pg. 1-10

  17. Business Risk

  18. Comparable Analysis http://www.potashcorp.com/industry_overview/2011/overview/company_overview/ten_largest/

  19. Comparable Analysis • Foreign competitors may have cost advantages • Cheaper raw materials/ low shipping expenses(especially for Asian Market) • Less stringent regulatory requirements (Environmental Protection) • State or State-related Corps • Main public competitors • Potash Corp. of Saskatchewan, Inc. • Israel Chemicals Ltd. • Agrium Inc. • Chemical & Mining Co. of Chile Inc. • CF Industries Holdings, Inc. • K+S Aktiengesellschaft

  20. Potash Corp. of Saskatchewan (POT) • World’s largest fertilizer company by capacity • 20% of global potash capacity • three primary crop nutrients – potash (K), phosphate (P) and nitrogen (N) • Potash is the core of the business • China, India, Latin America, and North America (75% population + 80% total fertilizer consumption) http://www.potashcorp.com/about/overview/#where

  21. Agrium Inc. (AGU) • Strategy • Global growth and diversification • Business operation • Retail business unit • Wholesale business unit • Advanced Technologies business unit • Agrium is the only publicly traded company that crosses the entire agricultural value-chain http://www.agrium.com/about_us/what_we_do.jsp

  22. Comparable Analysis: Company Performance Source: Yahoo Finance, dates from 1/1/08 – 10/22/12

  23. DCF Analysis

  24. Comparable Analysis

  25. Comparable Analysis

  26. Ratios Analysis

  27. Recommendation - HOLD Current Stock Price:$54.23 DCF Valuation:$55.36 Comparable Companies Valuation:$57.09 Recommendation: Hold 200 shares

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