Nearly every time I have strayed from the heard, I’ve made a lot of money. Wandering away from the action is the way to find the new action. - Jim Rogers
World War 3 is a guerrilla information war with no division between military and civilian participation. - Marshall McLuhan
The supreme art of war is to subdue the enemy without fighting. - Sun Tzu
You don't have to hold a position in order to be a leader. - Henry Ford
*** UNDER CONSTRUCTION ***
The recent changes across the globe since the last financial crisis of 2008 has created some exciting and attractive market opportunities in the agriculture sector. Despite recent interest in commodities mean agricultural prices remain depressed with long term data indicating many food based commodities are trading at historic lows (specifically when comparing their net asset value on an inflation adjusted basis). The greatest negative effect on commodity prices has been the constriction of credit in western nations, not only in the futures market but also in the trade and credit market creating significant short term challenges for both importers and exporters of agricultural commodities. We believe this is a market anomaly which will not last. Population growth trends remain strong and emerging market growth now commands a larger share of demand than western markets on a daily basis as agricultural commodities have great elasticity, demand for foodstuffs is increasing despite the doom and gloom among the western world media.
Markets bifurcation since a changed in central bank interest rate policies have not slowed demand for foodstuffs. Today’s opportunity is centers around supply destruction combined with a secular bull market in high quality productive farmland. The financial crisis’ occurring today will most likely increase in severity as many large western nations debts have only grown. Many value style companies have cleaned up there balance sheets or financial position, the artificially low interest rate environment by all major western world banks have created huge distortions never imagined possible. While stock indexes have improved providing a sense of complacency like 2001 and 2007, the levels of financial leverage, specifically in large banking institutions have only grown larger. The huge growth of financial assets (private and public) have been greatly aided by the unimaginable zero interest rate policy by all western banks.
Acquisition of assets in Uruguay, a country with a stable Constitutional Republic with no history of restricting exports or seizure of foreign capital with commercial & artistic goals commenced in 2004. As a former broker with a NYC Investment Bank the fundamental drivers of commodities [supply/demand] were discovered in addition to the history of this unique ‘Switzerland of South America’ thru a renovation project with a close family cousin. Uruguay’s attractive land valuations both in terms of soil productivity as well as access to modern and robust infrastructure has attracted many sophisticated investors from Europe and the United States. The bulk of recent property development has been in resort and leisure areas in Montevideo, Colonia and Punta del Este. We understand this growth and have personal experience in these areas.
We see the agricultural towns north of these more developed costal regions as a significant opportunity. Well capitalized contrarian investors in the agricultural regions in Uruguay have mostly been interested in productive farmland with little to no interest on the smaller towns. Other larger regional towns also have yet to see interest from any larger real estate investment firms. This is most likely because Uruguay in general is still off the radar to most western property companies and the agricultural firms looking at productive land valuations don’t want to “dirty their hands” with smaller opportunities in towns which may require slightly more attention (than a one time larger hectare land acquisition). In addition, smaller commercial and residential properties are not within the interest or core competency of these larger agricultural investors.
Arachán Capital has committed principal capital with an added focus on properties in uncommon areas which may greatly benefit from an improving economy in Uruguay. Unique real estate zoning laws exist in Uruguay which have contributed to a lack of urban sprawl and uniquely “authentic” architectural towns surrounded by productive farmland. Our research and direct expertise enabled us to better comprehend specific areas which may benefit from higher agricultural commodity prices as well as access to some of the largest fresh water reserves in the world. We see this unique opportunity to be aided by the historic diverse culture, architecture and a pleasant climate select regions of interest.
The investment climate is positive, with foreign and national investments treated alike. There are no price or exchange controls. Judiciary integrity is high and the overall level of corruption is relatively low. In 2019, the United States was the largest foreign investor in Uruguay, reflecting its longstanding presence in the country. Uruguay has bilateral investment treaties with over 30 countries, including the United States. The United States does not have a double-taxation treaty with Uruguay. Both countries have a Trade and Investment Framework Agreement in place, and have signed agreements on open skies, trade facilitation, customs mutual assistance, promotion of small and medium enterprises, and social security totalization. [1]
We created the name California Sur archiving future plans to provide the a market with goods & services not readily available. The choice for Manantiales, Uruguay met specific criteria with the acquisition of a 2nd property in Diarrhea [El Chorro - hillside].*
Mentor: ‘New things in Old places & Old things in New places.’
Framing AAron Bros - Mobile Education > 5/6 years
Negotiation of contracts - Manufacturing Honeywell CAS Systems
Equitable solutions away from Western Financial Centers Rapidly Cannibalizing Financial Collateral
Refuge in Commodities / hard assets
Speculation upon people in good projects - Capital Structure Sound
Humility to create a commodity
Art Gallery from early feral adventurers / surfers / board design
Disconnection from nature.
* Time in Vista Detention Center & East Mesa Jail revealed the Mexican slang of ‘Chorro’ meaning dirty water or diarrhea. This moniker seems appropriate as the opportunity to buy our 2nd guesthouse with ocean views was only possible thru mass psychology of no interest in this area. Greenland / Iceland psychology.
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Paradigm Shift > Awakening > Consciousness > Opportunity.
Goal > Recapitalize a personal balance sheet earning multiples on capital.
Traditional Methods > Margin & Financial Leverage are the Flavor of the Day.
Less accommodative financial conditions [free money - no interest rates] gone in 2022 / 2023 may see reality > Those ‘Swimming Naked’ when the tide pulls out.
Our Approach > Embrace Distortions never seen in 30 / 50 years.
In October of 2001 in Solana Beach, California my life crossed paths with a new friend who ran a hedge fund back in the 1975-85 era. I had just returned from a Financial Advisory business class with Morgan Stanley which was suddenly interrupted by the demolition of our building [Tower 2, World Trader Center]. We were on the 61st floor and during a break alone I commenced emailing the branch manager in Del Mar after noting the perfectly clear day overlooking TriBeCa. As a former resident of Jersey City and growing up in Western Massachusetts I connected with my new former hedge fund friend who was wearing a Woods Hole T-shirt.
Life can take us in pivotal ways at crossroads. Fortunate to listen & respect elders who have acted with substantial experience. My friend Bob pounded away numerous systemic risks in the financial system and the virtues of gold & precious metals assets. Commodities were viewed as an ‘alternative’ investment strategy at the time by our research department but my world was increasingly accepting to new ideas upon witnessing the Tower next to ours vaporize down the street from SOHO.
The Rogers International Commodity ® Index commenced on July 31, 1998. Jim Rogers of the former Quantum Fund noted a secular bull market driven by Asian demand, years of misallocation of capital and future debasement of western world currencies.
Salient Points
Most do not read so lets get to bullet points:
2001 in NYC Paradigm Shift experience
Frog’s Gym noted Bob Farrell warning a ‘Capn’ Kidd’ Woods Hole Massachusetts T shirt. introduction to gold & commodities.
Morgan Stanley ‘Outperform’ on Barrick Gold. Underperform on Goldcorp. Our macro research was ‘bullish’ on gold.
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