EXTRACT: ...Wall Street has all but ignored this possibility. Analysts and
investors are worried about falling Roundup sales but not the actions Monsanto
is taking to make up for them, and that's a mistake.
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Sell
Block: Monsanto's Growth Choking Out Competition?
Mad Money with Jim
Cramer
CNBC, 13 August 2009
http://www.cnbc.com/id/32404907
The
Obama administration is stepping up its antitrust enforcement, Cramer said
Thursday, and Monsanto could be the first target. Recent moves by the company
seem to be daring the Justice Department to file a suit.
Believe Cramer
when he says that the government has a strong case against Monsanto. A series of
competition-crushing acquisitions made this biotech disguised as an agriculture
outfit the market leader in genetically modified US corn, soybean and cotton
seeds. And Monsanto maintains strict agreements with its farmer clients that
leave them virtually no choice but to feed at the corporate trough. Plus, the
company plans to push through a 42% price increase on its new seeds, and there's
nothing these farmers can do about it.
Monsanto couldn't provoke a
government inquiry anymore than it already has. The firm seems to have farmers
and the seed market in a stranglehold. Monsanto's reputation is so noteworthy
that the company serves as the villain in the new documentary Food, Inc. Cramer
thought the movie's accusations alone might be enough to draw Washington's
ire.
Now, Monsanto blames the expected decline in sales of its premier
herbicide, Roundup, as the reason for the price increases. As much as Cramer
thought it was a dangerous move given the Obama administration's renewed focus
on antitrust, he knew the catch-22 this company faces: risk the White House's
wrath or risk an earnings shortfall.
Monsanto was the focus of this
week's Sell Block because Wall Street has all but ignored this possibility.
Analysts and investors are worried about falling Roundup sales but not the
actions Monsanto is taking to make up for them, and that's a
mistake.
Cramer wasn't telling viewers to dump the stock, but he did
remind them that this is not the George W. Bush Justice Department. The
government of, by and for the corporation, which ruled the eight years prior to
Obama's inauguration, is long gone. Owners of MON [Monsanto] should keep this in
mind.
Call Cramer: 1-800-743-CNBC
Questions for Cramer?
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