Thursday, January 29, 2009

Cresud--A Leucadia Pick

A recent article at the website, focused on Cresud--noting that Ian Cumming and Joseph Steinberg of Leucadia National are invested heavily in it.
Another is Cresud (Nasdaq: CRESY), a Buenos Aires-based asset holding company that owns and operates farms in Latin America and that holds equity stakes in IRSA (NYSE: IRS), a mall and hotel owner in Argentina, and BrasilAgro, an agricultural asset play in Brazil. We've watched over the past few months as the stock has dropped from $18 to $14, then $14 to $10, and finally from $10 on down to $5.

It's since rebounded to around $8, but that price still seems too cheap for a company with Cresud's quality management team and asset base -- regardless of what commodity prices do in 2009. Further, Ian Cumming and Joe Steinberg of Leucadia National (NYSE: LUK) -- two value investors with a stellar track record -- own shares, having bought in for a far higher price.

It's to the point where I (Tim) turned to Nate recently and asked, "Does the market think Argentina is going to nationalize all of its land and shut down its export market?"

Read Nate's reply, and the rest of the article--which goes into some detail on Latin American politics--at the following link.


  1. Wouldn't the Brazilian stock you've mentioned before, BrasilAgro, seem to have some advantages over Cresud? E.g., Brazil is more politically stable, and stronger macro-economically, so there would seem to be less political risk offhand with BrasilAgro.

  2. Yes. Less political risk in Brazil. It is pure speculation but Leucadia may have gone with CRESY as it is far more liquid--and they could scale into the position quickly if they wanted. It is also more diversified, geographically and politically, with assets in other areas outside of agriculture. Haven't heard Cumming or Steingberg compare the two yet, however, so again that's just an off-the-cuff response.