The market is pricing Mosaic ($MOS) at $24 like it’s a victim of the Middle East crisis. It’s the opposite. Mosaic is the only phosphate producer on Earth with a "Triple Moat" while the world is on fire.
1. The Sulfur Trap (Geographical Alpha)
Hormuz is closed. 50% of seaborne sulfur is gone. India and China are paying $900+/ton.
- The Reality: Mosaic uses molten sulfur from US refineries. It’s liquid, hazardous, and physically "trapped" in the US.
- The Spread: Mosaic is paying ~$500 in Tampa while their competitors pay $900. That’s $400/ton of pure alpha just for being in Florida.
2. The Ammonia "Cheat Code"
Global ammonia is in a total supply-side panic because Gulf exports are shut in.
- The Lock: Mosaic has a long-term contract with CF Industries for 725,000 tons/year.
- The Price: It’s indexed to US Natural Gas (Henry Hub). US gas is cheap and totally decoupled from the global chaos. While everyone else's ammonia costs are vertical, Mosaic’s are essentially fixed.
3. Your Main Competitor is Dying
Mosaic’s biggest global rival, OCP Group (Morocco), is shutting in 30% of their production. https://www.argusmedia.com/en/news-and-insights/latest-market-news/2809545-morocco-s-ocp-to-cut-production-in-2q
- The Reason: They import millions of tons of sulfur from the Gulf. With Hormuz closed, they have no raw materials.
- The Squeeze: OCP is the world's largest exporter. With 30% of their volume vanishing, global DAP/MAP prices are heading to $1,200+. Today's data shows Mosaic already surged exports by 85,700 tons to fill the gap, and they just got a bid at $840 a ton https://www.argusmedia.com/en/news-and-insights/latest-market-news/2813448-us-mosaic-sells-40-000t-of-dap-for-south-asia
4. Asymmetric Upside: The Math
The stock is trading at $24, which is literally Book Value. It physically cannot go lower without the market claiming their mines and Florida ports are worth zero.
If we assume a conservative $400/ton cash profit
- Phosphate Volume: ~7.0 Million Tons
- Phosphate EBITDA: $2.8 Billion
- Total Company EBITDA (Inc. Potash): ~$4.2 Billion
- The Re-Rate: At a standard 6x EV/EBITDA multiple, the enterprise value hits $25B. After backing out debt, that implies a share price of ~$52.
The Play: You are buying a company at its floor ($24) with a mathematical path to $50+ once the market realizes they are the only ones left standing with cheap and locked in US-based inputs.
TL;DR: OCP is shut in. Chinese phosphates closed and gone. US Refineries = Cheap Molten Sulfur. CF Contract = Cheap Ammonia. $MOS is the last man standing in a global fertilizer famine.
My winning positions. I'm expecting a 20x when Mosaic hits $60 a share.
$MOS: The "Hormuz Arbitrage" Nobody is Talking About. Why the Market is Wrong about the Sulfur Crisis.
byu/Cueg inwallstreetbets
Posted by Cueg
39 Comments
Nice write up
Appreciate you and your work and willingness to share
Thanks Claude!
Waiting for NTR to go to $90 heading into planting season
are you holding long dated calls?
Thank you
literally me with my 3 shares
Thank you, just bought 100 shares 🙂
they were also reducing their production in Brazil due to sulfur shortages.
Good write up, rare to see a well thought out post on this sub these days lol. Disagree, but interesting take.
According to my farts the sulfur supply is UNLIMITED
I’ve been crying about mosaic for weeks now. glad someone else sees it too. just wait, it will all got tits up
make sure to consider the fact that mosaic is under investigation from the DOJ for alleged sulphur price fixing and is being sued by like 3 big farmers
Man sure would be great if there was a country that has a shitload of oil that just got “liberated” and if said oil was very high in sulfate and phosphate. Theres no fukin way in hell this was the plan the whole time.
Nice. I own some at $27 because I wanted to grab a phosphate miner that exploited Canadian reserves. I’ll likely add more if it keeps dropping.
Okay gpt what else are you gonna sell me
Claude wants a word:
Bottom line: There’s a real kernel of an idea (Mosaic benefits relatively from Gulf disruption vs. competitors), but the numbers are self-constructed, the geopolitical assumption is speculative, and the person is clearly bag-holding losing options positions. Not a neutral analysis.
But I actually like your DD lol and want to put some money on
Does anyone have a good reason why this wouldn’t be a buy?
Tampa, incoming red algae bloom. Have fun.
Why 35$ sept calls? What makes you think Itl hit they by September?
Sooo calls?
Do u geography? Morocco is not concerned by hormuz blockade
I suppose the retort here is,
“The upside has a defined limit”
“You calculated the profit based on the current situation lasting for years, but markets are pricing in a relatively quick re-opening”
If the Hormuz situation becomes to be seen as something that can take years to resolve, I can see this thesis play out
do ppl just ask AI for stock tips now lol
This reminds me of tanker gang. The thesis was dead on, but most here would fomo into short term calls and get destroyed…
All my money and margin on it
The stock is where it was in January yet you say the market is pricing it like it’s ’a victim of the Middle East crisis’?
Nice write up. Sulfur is more of a problem than you’re letting on, they took a $250M hit last quarter due to high sulfur prices. Might still be a play if their output prices (phosphate) rise faster than sulfur input.
MOS importance to agriculture and it’s valuation is juicy… I’m in!
Wait I don’t get it
They are getting killed on sulfuric acid prices so how will they make money?
Other non sulfur dependent fert cos are doing great like ipi, cf, mnb.ax
Thanks Gemini.
GOOG calls
Great write up and I will jump in with shares. What is your take on the Fluorspar situation? In particular Ares Mining? Seems like a similiar situation and I am already loaded up with shares but I doubt I am allowed to post the ticker.
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What makes me automatically skeptical, is how can sometbing sort of as simple as your hypothesis be missed?
They sell a commodity, the price of this commodity is much higher, and the market is mispricing it because it thinks it wont be able to sell more of it, due to perceived supply constraints and youre saying market is wrong and they have no supply constraints?
Not saying youre right, but between oil and fertilizer ive been seeing a noticeable uptick of absolutely massive tankers passing through tampa bay the past week.
Thanks for the write-up. Does your thesis break if the straight opens up again before May?
Value investing was talking about this stock a month ago when it was at $27 a share.
MOS is phosphorus.
honest this looks pretty thoughtful, but personally i feel it really depends on the entry and exit as well, so as a retail trader i am not participating