Argentina Land Purchase. Good in a balanced Portfolio or has the boat sailed on Softs

[MichaelDes]

Re: Argentina Land Purchase. Good in a balanced Portfolio or has the boat sailed on S

WHat I mean is that the return only comes as the underlying economic activity succeeds. You are putting value at risk, you should have a lot more details - especially where the supposed opportunity is claimed to be so great.

Agreed - that's why I asked for the company to publish more information. Maybe with these teased out it could be a good enough investment.

That is extremely naive. Nothing is "guarranteed". The underlying agricultural operation might fail to deliver, the guarrantor might be found to have suffered economic loss and unable to meet the supposed guarrantee.

No guarantee is 100% safe nor is the rental guarantee of 5% either. This is the same with any company, equity or investment proposition. That is why it's a pity the company didn't post. Nothing is safe, including governments bonds or bank deposits. But it is the level of reward in a balanced portfolio that people are willing to make that have ramifications on future returns, either positive or negative.

Again, extremely naive. It is not axiomatic that this land would have any residual value at all, let alone a productive economic asset.

No value can be given on an asset definitely going forward but land historically has some value. It would good to know what the price index etc of agricultural land in Argentina is historically, from the company itself. This was stated in my original post, which is suspecting of the offer, and not cheerleading. Btw using big words sets my alarm bells ringing - that's axiomatic, it goes without saying...

I just found you presentation and discussion of this contained far too little critical appraisal for a public forum.

I am looking for opinions on a product that is being heavily advertised in the UK press, and trying to determine the opportunity behind it. The point of AAM is a shared forum to critique an investment proposition not for the OP to do all the leg work only. Or am I missing the purpose?

 

[Martin77]

Re: Argentina Land Purchase. Good in a balanced Portfolio or has the boat sailed on S

Is there any guarantees with oversea's property developments worth the paper its written on. What guarantee would be more suitable in this case?

FTR could you explain what you mean in this case. Is the income not coming from the lease of the irrigated farmland at an initial 10% yield?

Yes, income is coming to the investor from the lease, which is ultimately paid for by the farming yield. But that is yearly "rent", not that SAAM are actually buying the underlying asset (the land). They apparently only do that when you exit the investment, and then at some complex formula related to which currency you invested in originally, uplifted by some margin, and then compared to "market rate".

I am not sure what would be a more suitable guarantee in this case. I see the word "Guarantee" over-used in so many prospectuses for unregulated funds. Mostly they are just guaranteeing to pay something to you from your own investment money.

The guarantees that I have seen successfully implemented are where the bond holders or share holders have direct ownership rights to the underlying assets, or where a separate contract has been made with a third party insurer or bank to cover any losses, and a premium has been paid to that third party for that cover.

If it was clear that you had direct and unalienable ownership rights to a particular piece of land that was held in trust via this structure then I would feel that the risks were more tangible and understandable. But then again, what if your piece of land happens to be the last one on the list, and they no longer need that particular block because SAAM's operation was not successful, or they simply do not have the cash that year to buy from all the people wanting to exit the investment that year at the true market rate?

What is also really not clear to me is that money is changing hands here, but it is not clear what the various parties get for that money.

If an accountant looked at something in the books and said the selling price of asset X, or share of rental income from asset X, is A for party 1, but B for party 2, based on relative exchange rates set 4,8, or 12 years ago, I'd find that very odd in the book keeping. I'd find it easier to understand if they had a single currency for investment, which was related to the real asset price, and a separate transparent currency hedge for each currency, with a transparent cost.

In the other products I have invested in, the bond holders were owners of a trust, which in turn had a clear mandate and agreed procedures/articles of association set up in advance on how to protect the interests of the members (the bond holders) and which was separate from the operating company. Named individuals also had first legal rights to the actual property site via the Trust written in to the consitution of the operating company: even ahead of other lenders debtors and banks. So the operating company could not use that particular underlying asset as collateral against other loans. When things go belly up, shareholders generally come after bond holders after trade debtors after the tax man in the pecking order. This structure at least makes sure you're first or second in the queue for your money.

Someone who is setting all of this up should be making money here, but it really isn't clear how or who or how much. They take care of the initial set up charges, selling commission, local tax bills, currency fluctuations, finding a buyer, ensuring market price, running the companies etc. etc. How nice of them. They won't do that for free will they. So I presume that there is also some other priority shareholding or management fee/contract in place that is not mentioned anywhere.

So, completely transparent. Not.

 

[MichaelDes]

Re: Argentina Land Purchase. Good in a balanced Portfolio or has the boat sailed on S

Yes, income is coming to the investor from the lease, which is ultimately paid for by the farming yield. But that is yearly "rent", not that SAAM are actually buying the underlying asset (the land). They apparently only do that when you exit the investment.

As always a cracking post!! Thankyou so much for deciphering the jargon and explaining the pitfalls in laymans terms. The prospectus is light on detail and legal titlements, and again it's a pity the company could not clarify the mechanics. No doubt there is rational justification behind it all.

Possibly an ETC in the sector may be more appropriate and for my property investments, it maybe better to stick to commercial bricks and mortar. Create added value through controllable intervention...

Btw I've just sent an email to the company with the AAM link. Hopefully they will respond - wouldn't write/off yet but need more convincing...

QWERTY what do you think of the future of pork belly, cotton and beef?

 

[Martin77]

Re: Argentina Land Purchase. Good in a balanced Portfolio or has the boat sailed on S

The prospectus is light on detail and legal titlements, and again it's a pity the company could not clarify the mechanics.

Don't get me wrong. I'd really like to buy one of these type of schemes, because they look so attractive on the surface. Otherwise I wouldn't take the time to read the prospectus. So if the offering company can offer clarification, I'd welcome that. But until I understand the underlying mechanisms, I'll keep my money invested elsewhere.

 

[GDE]

Re: Argentina Land Purchase. Good in a balanced Portfolio or has the boat sailed on S

Don't get me wrong. I'd really like to buy one of these type of schemes, because they look so attractive on the surface. Otherwise I wouldn't take the time to read the prospectus. So if the offering company can offer clarification, I'd welcome that. But until I understand the underlying mechanisms, I'll keep my money invested elsewhere.

The MD is aware of the thread, Im sure you'll get some clarification soon enough, he is in transit at the moment