Chris Karlin of Aquitania Capital Management presented his in-depth investment thesis on Adecoagro (US: AGRO) at Wide-Moat Investing Summit 2019.
Adecoagro is an agricultural company in South America, with operations in Argentina, Brazil and Uruguay. The company is involved in a broad range of businesses, including farming crops and other agricultural products, cattle and dairy operations, sugar, ethanol, and energy production and land transformation.
AGRO has established itself as a low-cost operator and has crafted a synergistic ecosystem that provides it with strategic options in the commodity markets in which it operates. The company is halfway through its latest five-year plan, which has positioned EBITDA to grow over 25% from 2018-2021.
AGRO shares recently traded at 7.5x 2019E adjusted EBITDA minus maintenance capex of $210 million. Applying that multiple to the 2021E forecast of $300 million yields a share price of $12.66, ~83% upside to the recent price of $6.90.
Furthermore, given AGRO’s position as a low-cost provider with a solid balance sheet and track record and an accomplished management team, there is reason to believe that the company can continue to compound capital at attractive rates for an extended period.
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About the instructor:
Christopher Karlin has been in the investment business since 1991. Prior to founding Aquitania Capital Management in 2012, Christopher held positions as a Research Analyst and Portfolio Manager at First Pacific Advisors, Kestrel Investment Management and Fairview Capital Investment Management. Christopher interned with Farallon Capital Management while pursuing his MBA. He began his career with Wells Fargo Nikko Investment Advisors which later became a part of Blackrock. Christopher received his BBA from the University of Wisconsin in 1990 his MBA from Yale University in 1998 and has held the CFA designation since 1994.