They’re Canada’s largest processor of peas and lentils, and they have operations in other similar products like canary seed and chickpeas. They source, split, clean, process and package these “pulse grains” for the export market, and the vast majority of their product heads towards export markets. Lentils are a staple food in countries like India and in the Middle East. Traditionally, lentils and peas have not been a staple part of the Chinese diet but pea starch is now being processed into vermicelli noodles, and with sky rocking wheat prices, Chinese imports of these processed pea products are increasing.
Alliance Grain is set-up as a business trust. Ordinary Canadians and international investors can invest in its Toronto Stock Exchange publicly traded units. However, unlike most of the other Canadian companies purchased in the Investor Intelligentsia model portfolio, we are not aware of any over-the-counter representation for US-based investors to use for direct purchase in US-based brokerage accounts. Orders by US investors will require a broker-assisted trade placed directly on the Toronto Stock Exchange. Not all brokerage firms will accommodate such broker assisted trades, but most of the bigger discount brokers will do it – for an added fee.
In 2011, the tax status of business trusts will revert to standard corporations. Alliance will likely continue on under a standard corporate model. But until such time, it will pay a quarterly distribution. The most recent distribution of C$ 0.135 per unit will be paid today, with the record date having been March 31, 2008. It’s unlikely the payment will have an impact on the share price since small accumulation in the units surfaced last week and we’re well past the ex-dividend date anyway. The yield works out to just over 5% per year, but we anticipate unit price appreciation as well as larger distributions in the quarters and years ahead.
As all food-stuff products ride an escalation price spiral, pulse grains will catch higher prices as well. To date, well over six months of the latest leg of the agriculture bull market has rocketed forward while Alliance Grain has gained almost no attention among investors. This will change, and the rate at which it happens will depend on management telling the company’s wonderful story. Alliance Grain is a dominant player in the value added processing and exportation market segments of the North American pulse grain industry and they will cash-in as prices for pulse grains rise.
For further information on the company, you can peruse their websites:
AllianceGrainTraders.com
-and-
Saskcan Pulse Trading
Recent press coverage include an informative article in Farm & Ranch Guide (click here) and last year, the company was featured on BNN Television in Canada (for a Windows Media Player video clip, click here).
Before the market open we will enter a limit order for 1,500 units at C$10 as traded on the Toronto Stock Exchange. This order will be good until canceled.
