AgFeed Industries (FEED) produces and sells fodder and blended feed for use in the domestic animal husbandry markets in China. The company also raises hogs for China’s pork industry and manufactures premixed poultry food products. AgFeed has production facilities in Shanghai, Nanchang and Nanning, and over 20 hog farms in southern China. AgFeed has been acquisitive to add to its bottom line and gain market share, making several acquisitions earlier this year in China. China, the world’s largest country by population, is also one of the largest pork markets in the world.
On Monday, the company announced a $10-million share repurchase program, which will be funded with available cash on hand. AgFeed has $31.3 million in cash on hand. The company also said it expects to earn $1.10 a share for fiscal 2008, which is 10 cents above the average analyst estimate. Three Wall Street analysts track the company and Maxim Group rated AgFeed shares a “buy” in April. The company is expected to report third quarter results in early November. In September, AgFeed announced the acquisition of two hog farms in China. The company expects those acquisitions to be completed this month.
China-based AgFeed was founded in 1995 and is 41-percent owned by company insiders. Another 21 percent of AgFeed shares are held by 57 institutions. Mutual fund owners include DWS, iShares and SunAmerica. Of note to potential investors, AgFeed said in August that it believed that its shares were being improperly sold short in so called “naked short selling” transactions. The company said a short seller was shorting three million shares from $10 a share. The practice of naked short selling, which means the short doesn’t ever take ownership of the shares, has been banned by the US Securities and Exchange Commission.
AgFeed shares closed Monday at $6.26 and have traded between $5.08 and $21.31 in the past year. AgFeed is a surprisingly liquid stock for a small cap issue, averaging more than 457,000 shares traded per day over the last three months. The company has a market value of $208.4 million and a 12-month trailing price-to-earnings ratio of 19.
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