Value Investing with Sven Carlin, Ph.D. on $MOS (Oct 27, 2026)

I just wrote an update on my research platform about the company "Mosaic", and as promised, I will share it with you here. If we look at the stock, it has been volatile almost since time immemorial .

I started following him in the middle of the first decade of this century . I even owned it once or twice, and achieved acceptable results, but they weren't amazing.

However, if you look at the situation, Nutrien has a larger stake and has made better profits than it because there are some things about Mosaic that are good to know, but the stock is now very cheap and offers real opportunities.

Because Nutrein is the most stable, it rose by 250% between 2020 and 2022, while Mosaic rose by 600%. So , that's the difference between them.

Looking at the company’s business, Mosaic is involved in potash, phosphate and distribution in Brazil with some production activities, and there is simply a bad situation, especially in phosphates, where Mosaic needs to buy ammonia and sulfur to produce its own phosphate products.

Sulfur prices, due to the war in Iran, have exploded, making phosphate production completely unprofitable for Mosaic . When things get this bad, the CEO says: "The only thing we can do is borrow money to survive."

They have $2.5 billion in unused revolving credit facilities. They will have to withdraw at least half a billion from it every year as long as the situation remains as it is.

But they are still investing, and they have reduced capital spending slightly. But the plan here is that low usage rates last year and this year, due to the high cost of phosphate, will cause crop yields to suffer, especially in areas with weaker soils such as Brazil.

Then you can see that production forecasts did not keep pace with demand. Therefore, at some point the use of phosphate will be necessary, and then sulfur prices may also fall, and that is the opportunity .

Prices have risen slightly, but not enough to justify the increases in sulfur prices.

But Mosaic produces 9 million tons annually. Let's assume 7 million tons of " Esterhazy", which is a relatively new mine in the long term, and BHP has spent fifteen billion to build this type of production.

Therefore, from this perspective, we can say that "Esterhazy" is worth 10 billion, which is double the market value minus the debts. So, that's just what they're priced for there.

They are reallocating capital while continuing to pay out profits. Of course, dividends can be reduced ; there's no point in paying them if they don't generate liquidity, but the financial manager summarizes the investment in "Mosaic ".

First, we are burning 500 million a year, but they say this is a temporary and unsustainable situation, and when the recovery comes, it will be accompanied by a large pent-up demand, and there will be a retaliatory use of fertilizers that will benefit " Mosaic", as we saw in the graph earlier.

There are many questions from analysts who are always trying to model stability, but the question is not what will happen in the next quarter or this quarter. The question is, when will the entire sector change ?

They know it will end, but the question for investors is of course when.

Looking at the financial data a little, total assets are 24 billion, and equity is 11.6 billion. There is a large debt of 5.8 billion, which represents a cost, especially with rising interest rates.

However , there is some value there as well. Just look at the stake in Ma’aden, the Saudi fertilizer company in which they own a stake. They will be allowed to sell part of it in December 2027, part in December 28, and the third part in December 29.

Let’s say it is worth two billion. So, one day this release of value will occur, which will most likely lead to a reduction in debt, and possibly a share buyback, depending on the situation.

Regarding capital allocation , once again, traditional Wall Street, when things were great for the company and the stock was high, spent $3 billion on share buybacks, and now they are reducing it.

Stupid "Wall Street ," wrong timing in the economic cycle, but that's the reality.

There have always been problems with "Mosaic" ever since I started monitoring it, but that's okay. The market doesn't like the situation, and Wall Street sees a recovery by 2028 as meaning waiting forever, so they are downgrading the stock, creating an opportunity for us.

They will drain their liquidity and lose money until the situation changes.

Now, with cyclical stocks, you can look at the mid-cycle cash flows, and I did those calculations in my analysis for 2024 and 2025. I came up with about 500 million a year, so we are trading a cyclical return of 10%, but of course, when things get better, and if that explosion in demand happens, Mosaic will make a lot of money.

When it comes to cyclical stocks, mining companies, and fertilizers, profitable deals are at an average mid-cycle return of between 15 and 20%. Therefore, we need an additional 40% reduction, i.e., from 3 to 4 billion, and perhaps if the situation does not change in the next six months, we may be facing a truly winning deal.

Now, I have added this stock to the list of stocks I cover on my research platform. At the end of the month, I always look at whether I will include it in a diversified portfolio, perhaps with a strategy that starts at 1-2%.

If the price falls further, I increase the investment, and if it falls further, I increase it again. When a recovery occurs, we monitor the situation over time. Therefore, I might buy this stock within the next 72 hours.

I would like to state transparently that I do not currently own it .