Argentina Land Purchase. Good in a balanced Portfolio or has the boat sailed on Softs

[MichaelDes]

I noticed a company called movewithus [UK based] has been advertising heavily in Moneyweek magazine. Their spin is as follows

Minimum return 66% profit

"With the growing demand for food and renewable energies in the World, we are offering a unique opportunity for investors to buy, managed, agricultural land in Argentina - The World’s leading exporter and third largest producer of soybean oil. It is also the second largest exporter of corn and in 2006 signed trade agreements with China and India to supply crops for at least twenty years. Argentina currently export commodities to the EU, USA, Brazil, Chile, Japan, India and now China. The land will be used to grow food and carbon offset crops, which will generate a high annual income and capital growth".

Overview: Project Greengold Optimum
· Minimum investment is $40,000 / £20,000 / €30,000
· Client can choose which of the above currencies to have rental return fixed in
· 10 hectares/24 acres of virgin land (to be converted to agricultural land)
· 10-20% nett annual rental return for 12 years (Rent is paid to client annually)
· Rental bond held by a UK bank
· Exit points at years 4, 8 and 12
· Suitable for Self Invested Personal Pension (SIPP)

The company reckon the downside has little exposure, as through their own experienced offices in B.Aires the land purchases are at very low capital values - their MD is Argentine. I got some literature by email from the company - Is it possible to post on PDF sheets or excel documents?

Internet address - www.movewithus.co.uk/optimum

The investment is unregulated but a 5% guarantee is in place [according to the advertisement and follow up literature]. On the flip side, some commentors mention that soft commodities have been speculated through the roof already. For instance wheat prices

[broken link removed]

So has

(i) Anyone heard of movewithus.co.uk or partners in property plc?

(ii) Have soft commodities gone through the roof as a result of switch away from equity during the credit crunch and can it last?

(iii) Can demand for Softs in Asia last indefinately? If China blips with an American slowdown, can they continue to afford to buy? America accounts for over 26% of China's exports and their inflation is running at 8%.

(iv) Is land still cheap in Argentina and are yields achievable.

(v) Generally has Bio-fuel been the main cause of price spikes within the Softs market? The bio-fuel argument within Corn does not stack though, that is, energy to produce compared to energy generated. It is on a ratio yield of 1 units input creates only 0.6 unit output. Sugar cane admittedly is higher at 1 to 3. Sweet crude 1 to 20 and Canadian Sands 1 to 8. If the bio fuel argument was removed, is there still demand for Softs i.e. Asians still wanting a more Western styled diet?

The impending credit crunch and its fallout have changed my psyche in the last few months. This may still be a good investment but it's hard to judge. Any opinions...?

 

[z106]

Re: Argentina Land Purchase. Good in a balanced Portfolio or has the boat sailed on S

Softs have gone up considerably alright.

WHaet is up 133% in teh last 12 months I think.

They have all gone through the roof basically.

One of the reasons for this is the falling dollar as most commods are priced in dollars.

SO that's not gonna be remedied anytime soon anyway.

They are also being bought as a hedge against inflation. Something the fed are quite happy to let happen.

Speculators are also increasing the prices.

However - the main reason commods have exploded is due to demand from china an india.
The bull run started 7 or 8 years ago.

Has the ship sailed?

A lot of people think there could be another 2 decades to go in this bull run.
The most prominent being jim rogers.

There have been 3 commodities bull runs in teh last 100 years.
They lasted on average a little over 17 years each.

I have read up a lot on commodities as I am currently heavily invested in them.
You should go onto a few sites to have a look at the charts.
It really is the moither of all bull runs at the moment.
try [broken link removed]

How this all translates for land in argentina i don't know.

But if you are interested in commods then why not just invest in them directly rather than hoping to cash in through land in argentina.

 

[MichaelDes]

Re: Argentina Land Purchase. Good in a balanced Portfolio or has the boat sailed on S

But if you are interested in commods then why not just invest in them directly rather than hoping to cash in through land in argentina.

I prefer a direct investment in this story. It could allow cheap entry, rather than an ETF or fund that has already increased substantially in price...

 

[dunkamania]

Re: Argentina Land Purchase. Good in a balanced Portfolio or has the boat sailed on S

Minimum return 66% profit

Why did you keep reading after this first bit, unless for comedic value.

You dont sell 66% minimum profit return oppurtunities, you keep them for yourself

 

[z106]

Re: Argentina Land Purchase. Good in a balanced Portfolio or has the boat sailed on S

Ya - buying land in argentina is an unnecessary risk in my book.
To get proper due dilligence done could be a lot of work.

It could turn out to be a great investment of course. Not oine that i'd be all that comfortable with personally.

 

[MichaelDes]

Re: Argentina Land Purchase. Good in a balanced Portfolio or has the boat sailed on S

Why did you keep reading after this first bit, unless for comedic value.You dont sell 66% minimum profit return oppurtunities, you keep them for yourself

I knew this would arise. It's 5% per year guarantee or compounded over the 12 year term - 1.05^12 = 66%.

But anyone hear of this plc company or have anything of merit to add, negative or postive...

Anyone know how to post spreadsheets so I can post the the financial information and break down on the investment on the thread. Is it done through a yahoo link or what?

 

[GDE]

Re: Argentina Land Purchase. Good in a balanced Portfolio or has the boat sailed on S

I knew this would arise. It's 5% per year guarantee or compounded over the 12 year term - 1.05^12 = 66%.

But anyone hear of this plc company or have anything of merit to add, negative or postive

I am actually using Move With Us exclusively in the UK, Argentina and Spain for sales of my projects in the Philippines. - Obviously I would look at them in a positive light.
What I can say without bias is that they are a major company, in residential and overseas property in the UK, and that they give me an exhaustive list of due diligence requirements before they will take on a development.

They also have a serious corporate setup in the UK.

I cant really comment on the product as I dont know much about land values in argentina

 

[dicey_reilly]

Re: Argentina Land Purchase. Good in a balanced Portfolio or has the boat sailed on S

see below

 

[dicey_reilly]

Re: Argentina Land Purchase. Good in a balanced Portfolio or has the boat sailed on S

Hi Michael

Partners in Property Solutions PLC have been going since 1997

Fiscal
Consolidated
GBP
31 Mar 2007

Sales Turnover 17,420,674
Profit / (Loss) Before Taxes 2,571,055
Tangible Net Worth 3,114,153
Net Current Assets (Liabilities) 2,019,879

Looking at the website - 90% of the shares are owned by the founders and 10% by 'network members'.

Seems to be more substance here than some of the other propert specialists discussed on these boards but obviously you need to do your own due diligence.

Hope this helps

Cheers
Dicey

 

[MichaelDes]

Re: Argentina Land Purchase. Good in a balanced Portfolio or has the boat sailed on S

Softs have gone up considerably alright. Wheat is up 133% in teh last 12 months I think.However - the main reason commods have exploded is due to demand from china an india.
The bull run started 7 or 8 years ago.Has the ship sailed?A lot of people think there could be another 2 decades to go in this bull run.The most prominent being jim rogers.

The great thing about Journo’s is that for every positive commentary on a situation there is always an opposing view.

From Dominic Frisby, in London 27.02.2008

Yes, I know all the arguments. Asian diets are improving, their middle class is growing, they’re eating more meat, more grain has to be grown to feed the livestock, the drought in Australia has hit wheat supply, the Americans are using their corn to make ethanol, more fields are being turned over to corn, inventories are low, supply can’t meet demand, monetary inflation means higher prices in everything, what if we get bad weather and it kills the harvest? I know all of this. They are all utterly convincing arguments that hold a great deal of truth – it’s because of this credibility that more and more people are climbing on board and pushing the price up further.

Nevertheless the price has got way ahead of itself in my view and is due a correction, potentially a nasty one. All the risk is to the downside. This bull market began in 2000, but until very recently nobody was talking about it. Now the world, his wife and their shoeshine boy seem to be long grains. Not a good sign.

Great bull runs often end with a series of limit-up days (this is when the maximum daily move on the exchange is reached – unlike the FTSE 100, some smaller exchanges try to control volatility by limiting how far a price can rise or fall in a single day). We saw three limit-up days in a week a fortnight ago. The 30c limit has now been upped to 60 cents. We saw another limit-up on Monday and again yesterday. Is this your classic blow-off top? Many chartists would say so.

Looking at previous bull markets in wheat, the biggest was in the six years to February 1974 in which we saw a 312% move. Before that the biggest move was 173% in the four years to May 1898! In other words, as I pointed out at the beginning of this email, this eight-year, near-400% move, is the biggest in wheat’s history.

The subsequent corrections in virtually every major bull market in wheat saw it give back almost all of its gains. “Give back all of its gains?” I hear you say. “But that would take us back to $2.50 a bushel. Wheat’s up by over $2.50 this month alone.”

What goes up …?

One of the consequences of the high cost of grain is that it has become expensive for farmers to feed their cattle and pig. In fact, it’s so uneconomic many are sending their livestock to an early slaughter. This has led to there being rather a surfeit of meat on the commodities exchanges with the resultant steep decline in the price of hog and cattle (this despite the rise of the new meat-eating middle-classes in Asia we hear so much about).

Further down the road, as more stocks are slaughtered, what surely lies in store is a shortage of pig and cattle to eat all this wheat. Meat, not wheat, is where you should be looking for an entry point in the coming months. As for wheat, your eyes should be looking towards the exit.

On the basis of Oil crops not making sense and possibly being the driver, then some softs maybe short lived markets. But certain other softs, those in mind by property partners, should these continue a bull run for ten years plus, then buying cheap land through this reputable company could be an amazing investment for €20k [thanks GDE and Dicey Reilly]. A company called Agro Terra [ ] in the IFSC is doing something similar but minimum investment is USD200K...

IMO a reputable UK company with experience of the Argentine market, must know enough of an upside to offer a minimum return per year of 5% with a leased out yield in excess of 10%. As they mentioned their reputation is at stake as it is being organised through their South American subsidiary. I will give this one serious thought...

 

[joe sod]

Re: Argentina Land Purchase. Good in a balanced Portfolio or has the boat sailed on S

i have never heard of this before, i must look into it, i was invested in an argentinian equity listed in new york who own alot of land there, i made good money but got stopped out (with stop loss) in 2006 when the stock dropped 50% in 2 months, it later regained all this and achieved new highs but i was not re invested, however this looks like a good long term play (when i look into it more). I do not believe in investing in commodities themselves because you are not really buying commodities all you are buying is an option to buy them at a particular date and price in the future. Therefore they are short term and not long term investments, you are not part of the long term trend as you lose if the commodity drops in value at the particular date and price you have chosen, even if the long term trend is a bull market. The only downside i see with investing in land in argentina is that so much land has been bought by tycoons and foreigners, is this a recipe for popular revolt by natives,

 

[z106]

Re: Argentina Land Purchase. Good in a balanced Portfolio or has the boat sailed on S

I do not believe in investing in commodities themselves because you are not really buying commodities all you are buying is an option to buy them at a particular date and price in the future. Therfore they are short term and not long term investments, you are not part of the long term trend as you lose if the commodity drops in value at the particular date and price you have chosen, even if the long term trend is a bull market.

This is incorrect.

I buy softs (and other commodities) through a financial spreadbetting company and you can rollover as every contract ends.
That way you are there for teh long term if you want to be for a minimal charge.

 

[joe sod]

Re: Argentina Land Purchase. Good in a balanced Portfolio or has the boat sailed on S

This is incorrect.

I buy softs (and other commodities) through a financial spreadbetting company and you can rollover as every contract ends.
That way you are there for teh long term if you want to be for a minimal charge.

but you are charged a fee for rolling over, this is ok if there is a very short term correction, but what happens when you have a major correction like what happened with silver in may 2006 it only revisited its may 2006 high recently (silver has been in a bull market since 2001 yet it still suffered a severe 18 month correction) this is common for commodities, how much of your investment would be diminished by continually rolling over, you would need some nerve and some belief in the bull story to keep rolling over, most amateurs (like myself) dont posess this. Also spread betting is not physically buying a commodity but betting against another punter on its future value at a specific date, you have to be cleverer than the punter on the other side of the bet.

 

[joe sod]

Re: Argentina Land Purchase. Good in a balanced Portfolio or has the boat sailed on S

anyone thinking of jumping on the "soft commodity" band wagon to make a quick short term killing should read this article also from moneyweek,

[broken link removed]

remember spread betting and futures are essentially short term investments, you want to be sure its the long term trend and not the short term trend where your money is invested

 

[MichaelDes]

Re: Argentina Land Purchase. Good in a balanced Portfolio or has the boat sailed on S

I don't think this smells kosher. There are some impressive promises here and very little real information.

If you don't think it sounds kosher then looking at their cash flow projection seems mind boggling. Click here. The company have a PDF file that can be requested by email but for the full text version only click [broken link removed] (Bit skewed with my editing). Per the cash flow projections - "potential" for this unregulated product as quoted are

After five years - 106%

After eight years - 275%

After twelve years - 376%

Either way the company does not guarantee the capital but do effectively guarantee 66% if kept in for the term.

I am actually using Move With Us exclusively in the UK, Argentina and Spain for sales of my projects in the Philippines. - Obviously I would look at them in a positive light. What I can say without bias is that they are a major company, in residential and overseas property in the UK, and that they give me an exhaustive list of due diligence requirements before they will take on a development.

GDE is there anyway of you being able to contact them to post? If it sounds reasonable, then many people at this level of return and exit strategy could be interested as part of a diversified portfolio. Ireland should be a target market, given that according to the papers it is the second wealthiest country in the globe?

 

[z106]

Re: Argentina Land Purchase. Good in a balanced Portfolio or has the boat sailed on S

but you are charged a fee for rolling over.......how much of your investment would be diminished by continually rolling over.....Also spread betting is not physically buying a commodity but betting against another punter on its future value at a specific date, you have to be cleverer than the punter on the other side of the bet.

Ok - to take your points above.
Yes you atre charged a fee - but it is minimal. Even if you are involved for many years it is minimal.
You are charged a fee for everything - why should spreadbetting be any different?

Anyway - i don#t want to get into a conversation about the benefits of spreadbetting as it has been widely discussed on a couple of other threads if you want to have a look.

But you are not betting against another punter. You are speculating as to which way the market will move.

 

[GDE]

Re: Argentina Land Purchase. Good in a balanced Portfolio or has the boat sailed on S

[/COLOR]


GDE is there anyway of you being able to contact them to post? If it sounds reasonable, then many people at this level of return and exit strategy could be interested as part of a diversified portfolio. Ireland should be a target market, given that according to the papers it is the second wealthiest country in the globe?

No problem i'll let them know about the discussion

 

[ubiquitous]

Re: Argentina Land Purchase. Good in a balanced Portfolio or has the boat sailed on S

I'm amazed that this proposal is even being discussed. The words "bargepole" "touch" and "wouldn't" spring to mind - especially in the current climate.

Btw, is there ANYONE really naive enough to believe that Ireland "is the second wealthiest country in the globe"?

 

[Martin77]

Re: Argentina Land Purchase. Good in a balanced Portfolio or has the boat sailed on S

One thing I find rather odd about this set up:

10 hectares of agricultural land for an investment of: $40,000 / £20,000 / €30,000.

So what are you actually getting? Is it a share (they talk about shares in some portions)? Is it a fixed income bond (they talk about guaranteed returns and rental bond)? Or is it the actual land (the original post talks about 10 hectares of land and text states that Movewithus enables Investors to purchase uncultivated land)?

Where's the currency risk covered? And in what currency is the underlying asset priced? Argentinian Pesos?

I mean 30K euros is no longer 20K sterling. Even just looking at last year's fluctuations we've gone from somewhere near 1.48 to 1.35. Never mind the divergence over a long term 12 year deal like this. According to their document: the Operating Company carries all exchange rate risk. Wow. But the OpCo (SAAM) only pays the rent, and has a contract to buy at a later date effectively at a minimum fixed exchange rate. But they don't own the actual land assets yet. In the text it says that the land is owned by the Local Company. The Investor Company owns shares in the Local Company. The investor holds shares in the Investor Company. And when SAAM buys out someone at the minimum fixed price or above after 4, 8 or 12 years, what exactly are they buying then and from whom: the investor's share of the Investor Company, a share of the Local Company that owns/ holds the piece of land in trust, or a title to a particular piece of land? Seems very odd that the price/value of that item/ asset can fluctuate depending on the currency chosen for the original shareholding/ deposit and the exchange rate at that time. What happens once SAAM hold 51% of the voting rights if they are buying investor's or local company shareholdings? As an illustration of how much FX can effect this deal, the Argentine Peso has gone from 4.10 to 4.81 to the Euro in the last year. This risk structure is thus not clear to me at all.

I see no mention of any real guarantees on the downside at all. It could well be that after 4 or 8 years they could have paid out all of their seed investment cash from the investment company, SAAM reneges on their rental contract, and the investment company simply goes bust, leaving the actual land to the bank creditors/ the local company, and you with no capital at all. Seems to me you're betting on SAAM (a South American farming company) more than anything else.

I'm always suspicious of derivative/ bond type structures involving fixed assets like overseas property and land. I always look at where the real income guarantees/ ownership rights lie, and if it isn't clear I won't invest. And this case is certainly not clear IMHO.

I do own some mortgage bonds, but in that particular case there is a clear legal guarantee structure in place and the individual named bond owners have first rights on the underlying property in the event of the bond-issuing company going bust.

 

[MichaelDes]

Re: Argentina Land Purchase. Good in a balanced Portfolio or has the boat sailed on S

One thing I find rather odd about this set up.

10 hectares of agricultural land for an investment of: $40,000 / £20,000 / €30,000.So what are you actually getting?

Yes this is intriguing. It's a pity the company could not provide more information by posting on the site. Without this insight it's really only guesswork and I dont invest on this basis.

I see no mention of any real guarantees on the downside at all. It could well be that after 4 or 8 years they could have paid out all of their seed investment cash from the investment company

Is there any guarantees with oversea's property developments worth the paper its written on. What guarantee would be more suitable in this case?

I'm always suspicious of derivative/ bond type structures involving fixed assets like overseas property and land. I always look at where the real income guarantees/ ownership rights lie, and if it isn't clear I won't invest. And this case is certainly not clear IMHO.

FTR could you explain what you mean in this case. Is the income not coming from the lease of the irrigated farmland at an initial 10% yield? The investment company [like qwerty] are of the opinion Softs are in the middle of a super-cycle that is here for another 10 years or so, and based on the pricing v demand it seems a relatively well-conceived business model. The company has been quoted as been reputable and not re-sellers.

No problem i'll let them know about the discussion

I would have given it serious thought if the issues were understood clearly and that's the reason I posted the information on the site. AAM is a great backup tool to your decision making...

These guarantees don't appear from nowhere - I would be concerned about the counterparty risk here. From where is it being paid? I know they mention a rental bond, but that has to be paid by someone and enough to guarantee 66% of the initial capital value. How certain can you be that such a generous promise (and it is very generous) can be met by the counterparty.

Where does the company make their money from? It's not to help the poor South Americans meet up with the rich Europeans to create win/win for them only. Where's the turkey?

Further on this rental guarantee. What about the capital? If this is not guaranteed a 66% guarantee on rental is too much consolation if you lose 100% of your capital.

The guarantee is 80% after 12 years. But if the land was bought for cheap as chips [presumption] then by irrigating and developing like in the case of expanding a commercial property then added value should hold with any new pricing. The only downside is (i) Civil war or peasant uprising - don't know the chances (ii) The price of Softs going down the toilet and becoming uneconomic to export [esp. if oil spikes]. But people have to eat, and each year there is 75million more people on the planet so demand is not going away.

Exit. I don't see anything about the mechanics of exit. Exit is financial jargon for "sell it to someone else". That concerns me. Finally, and this is just the financial cynic in me, but anything this opaque marketed as "Greengold" and "Optimum" just sets my alarm bells ringing.

Yes the company should give more details on the exit strategy but I assume the land in the future will be an ongoing and profitable business proposition. Again these things shoud be stated not assumed. You're right the company name has my alarm bells ringing too.

Softs have gone up considerably alright.Has the ship sailed?A lot of people think there could be another 2 decades to go in this bull run.

QWERTY what do you think about ETC's in pork bellies, beef and cotton. None of these sectors have moved since the soft super cycle began. I personally think the bio-fuel subsidy has caused major hedge fund intervention into the grains and sugar market and the hedge funds are exploiting this to make money hence prices in bubble zones. The futures price of pork belly and especially beef has hardly moved. Taking into consideration the reported article in this thread from Dominic Frisby, this doesn't make sense that is it takes 7kg of grain to produce 1kg of meat. Beef inventories could fall into the dangerously low category by 2009, and with demand increasing by 5% per year - next year the traders in the Chicago exchange may do an Eddie Murphy stunt with orange juice, in the Movie Trading Places - hopefully??

For one, unless I had more information then I too would be hesitant of any Argentine proposition. ETC's etc can be switched or cashed, can they not? Therefore more controllable.