Sothebys (BID), The Walt Disney Company (DIS), CF Industries Holdings, Inc. (CF): Following Daniel Loeb’s Bets

Price looks attractive
Loeb has been adding shares of CF Industries Holdings, Inc. (NYSE:CF). The reason? Probably the stock’s price and high M&A probabilities. As a matter of fact, in the past CF Industries Holdings, Inc. (NYSE:CF) was subject of a hostile bid from Agrium, the Canadian fertilizer producer.

Of course CF Industries Holdings, Inc. (NYSE:CF)’s seemingly low 7.9 times P/E multiple can be explained through the expectations of an oversupplied market. According to the Financial Times, “the global fertilizer industry faces a large surplus as new production plants come on stream after a $90 billion investment spree.” That said, the company’s great cost structure (thanks to its access to low cost North American natural gas) and stock’s price will defend investors from potential future pricing pressures on fertilizers. I am sure Daniel Loeb is well aware of the risks, but “value is what you get and price is what you pay.” A low-cost producer at a very low valuation level in an industry that is prone to M&A makes me think that CF Industries Holdings, Inc. (NYSE:CF) could be a good buy at the current level.

Bottom line
Following a great investor’s ideas is always a good way to learn. Daniel Loeb has been a consistent alpha generator, and I believe he will continue in his current path as years go by. You should consider his ideas and concepts at the time of adding a new position into your own portfolio.

The article Following Daniel Loeb’s Bets originally appeared on Fool.com and is written by Federico Zaldua.

Federico Zaldua has no position in any stocks mentioned. The Motley Fool recommends Sotheby’s and Walt Disney. The Motley Fool owns shares of CF Industries Holdings and Walt Disney.

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