JP Morgan Highbridge Saw Potash Potential

Chidem Kurdas

Recently Russia announced an export ban on grains and BHP Billiton made a contested offer to buy Potash Corp. Long before those events moved agriculture to the headlines, JP Morgan’s hedge fund unit made a big bet on a fertilizer company.

Highbridge acquired a $160 million stake in Mosaic Co., a phosphate and potash producer formed in 2004 with the merger of Cargill’s crop nutrition business and IMC Global Inc.

As it turned out, there was more money to be made by buying Potash Corp.—the BHP Billiton offer has boosted the stock, which is up 61% in the past 12 months. Mosaic is up 15% for that period. But barring perfect foresight, going for Mosaic was still a shrewd choice.

With this trade the manager indirectly  put money on agriculture, by buying a major player in a key input market. At the time people were generally not focused on agriculture, whereas now there is more interest in agriculture-related investments.

Highbridge, which managed $21 billion as of June, runs a commodity and energy trading shop among various strategies, but its long/short stock funds also invest widely in  the equity of commodity-related businesses. For instance, Highbridge funds held $156 million in Alpha Natural Resources, a large coal producer.

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