Global fund adds agriculture stocks to resource mix

Evan Smith and Brian Hicks are buying agricultural stocks after shares of oil and mining companies made their U.S. Global Investors mutual fund the top performer among its peers over the past five years.

The $1.3 billion Global Resources Fund owns shares of fertilizer makers Potash Corp., Agrium and Terra Industries, which surged by an average 175 percent during the past year, through June 19. Eight of the fund’s 10 biggest holdings are still energy companies, which together rose by an average 50 percent in the same period.
Adding farm-related stocks reflect the fund managers’ view that the commodities bull market that started in 2002 has grown beyond oil and gas companies.

Farmers worldwide are using more crop nutrients as demand for food increases, and more raw materials to make fuel including ethanol and biodiesel.

Companies that grow and process agricultural commodities such as sugar or corn are a new way to take advantage of rising energy prices, according to James Rogers, chairman of New York-based Beeland Interests. He founded the Quantum Hedge Fund with George Soros three decades ago.

Rogers said investors should avoid most asset classes, except for agricultural commodities. He has been bullish on the market since at least 1999, when he forecast a 15-year boom in commodities.

Demand for commodities from energy to building materials to food will remain robust because of demand from emerging economies led by China, India and Brazil, Smith said.

Seattle Times