Hackett Advisors in the News

US SMALL/MIDCAPS-Agri sector outshines, materials lead stocks up

NEW YORK | Tue Aug 17, 2010 1:45pm EDT

Aug 17 (Reuters) - Better-than-expected U.S. industrial production data and a rejected takeover bid boosted shares in the materials sector, the top performers among mid- and smallcap stocks on Tuesday.

Data showing sturdy growth in industrial output, implying the economy has enough strength to keep growing, gave a boost to basic materials shares.

Among those, agriculture and fertilizer stocks led gains as midcap Intrepid Potash (IPI.N) jumped 7.1 percent to $25.65 after Potash Corp of Saskatchewan (POT.TO)(POT.N) rejected BHP Billiton's (BHP.AX)(BLT.L) unsolicited $130 per share cash offer. The rejection fueled takeover speculation in the sector and a rebalancing of asset prices.

"The ag sector has been pressed all year until recently, so there's tremendous value," said Shawn Hackett, president at Hackett advisors in Boynton Beach, Florida.

"When you get a takeover at such a huge premium, from a pretty sharp operator, that is a helpful catalyst to bring valuation up to the surface and get money flowing back in."

The S&P midcap Chemicals industry index .4GSPPM rose 2.8 percent. NewMarket (NEU.N) rose 5.6 percent to $105.62.

Smallcap Quaker Chemical (KWR.N) jumped 6.3 percent to $33.43.

Hackett said the larger investment opportunity is in the smaller stocks, which he said take longer to react to a takeover in the sector.

His picks were China Agritech (CAGC.O), China Green Agriculture (CGA.N) and Sprott Resources (SCP.TO). China Agritech jumped 12.2 percent to $17.14 and China Green rose 5.6 percent to $11.45. Sprott was trading mostly flat on the Toronto Stock Exchange.

With the Potash bid "someone just raised the bar and now all the other stocks are going to start repricing higher value for those fertilizer assets," Hackett said.

The S&P MidCap 400 index .MID rose 2.4 percent while the S&P SmallCap 600 index .SML advanced 2.5 percent. In comparison, the benchmark S&P 500 .SPX gained 1.9 percent. (Editing by Todd Eastham)


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