I am surprised on both yesterday and today's prices in GNC....

I am surprised on both yesterday and today's prices in GNC. Markie, well done on closing your short trade on the lows.

I did not expect a "profit downgrade" after only given guidance in November. However, one thing is for sure, when you invest into ag. stocks like GNC, you do need a helping hand from mother nature. As I mentioned before, QLD and NSW had a bleak winter season, which was partly offset by VIC.

The good thing is we have gotten the nasty surprise out of the way. What people need to know is before they start bashing GNC management for the downgrade, most of it is really out of their hands. Weather forecasting is not an exact science. Mgmt is being proactive in pulling out costs for GNC (i.e. closure of merchandising etc.) That's the best they can do. Additionally, there is balance sheet strength for GNC now too.

Well, this year has been truly terrible for grain yields on the Eastern seaboard and if not for VIC, it would have been worst.

I am still doing a bit more research into the Viterra ABB takeover and when that is done, I will post a more detailed note.

As always, investors need to hear both sides of the story and we need to take on board all commentary. Just as a thought before Christmas, QAN is trading at close to 20x P/E and instos. are still backing it. The reason is they expect trading conditions to normalise for QAN in the medium term (i.e. load factors going back to normal). As for GNC, the big question is whether we will have good winter rains in 2010. That is harder to predict and that is the biggest uncertainty with this stock.

I do agree some price targets are looking unrealistic in the short term given the recent downgrade + stock overhang still to clear. $10 is totally unrealistic. Even $8 is extremely optimistic. The overhang will need to be cleared and GNC post some positive news before the stock can even try breaking through the $7 barrier. However, I stand by my earlier comment of not trying to short the stock under $6 as you are basically going short at the bottom of the cycle in a drought affected year. In the short term, who knows how the price will trade. It's been extremely volatile.

NOTE: My sentiment is a long term buy. The price action is too volatile in the short term (as per yesterday and today)


Keep the posts coming and.....

Happy investing.