Title: Investing in Cargill: A Guide to Purchasing Shares
Cargill, with an annual revenue of a staggering $160 billion, is a colossal player in the agricultural industry. It offers food, ingredients, agricultural solutions, and industrial products to farmers and other customers, securing its spot as the nation's largest privately held company, according to Forbes.
Established in 1865 by William Cargill, the company has been a family-owned business till date, with descendants of the founder owning an estimated 88% of the shares and employees holding the remainder. Despite internal pressure to complete an Initial Public Offering (IPO), Cargill has managed to maintain its private status by diverse strategies.
IPO: A Long Shot
An IPO, or Initial Public Offering, is the first sale of stock by a private company to the public, becoming a publicly traded entity. Though Cargill hasn't planned an IPO as of late 2024, it has resorted to creative methods to remain private. In 1993, Cargill initiated an employee stock purchase plan that allowed shareholders to cash in some of their shares. Additionally, they spun off their majority stake in fertilizer producer, The Mosaic Company (MOS), in 2011. Existing Cargill shareholders could exchange their shares for Mosaic, a publicly traded company, which they could sell.
The Mosaic Company: A Legacy in the Making
The Mosaic Company was formed through the merger of IMC Global and Cargill's crop nutrition business. Cargill spun off its interest in The Mosaic Company to shareholders in 2011. Although an investment in The Mosaic Company does not directly expose investors to Cargill, it does provide them with an interest in its legacy business. Today, Mosaic is a leader in potash and phosphate mining, two key nutrients crucial to feeding crops and increasing yields.
Bunge Global: A Global Leader in Oilseed Processing
Bunge Global, the global leader in oilseed processing, is another alternative for investors looking to invest in the agricultural sector. Known for producing specialty plant-based oils and fats, Bunge Global plays a significant role in producing food, feed, and fuel. In 2023, Bunge Global agreed to acquire agricultural products company, Viterra, increasing its diversification and enabling it to better meet customers' future needs.
Archer-Daniels-Midland Company: A Worldwide Leader in Animal and Human Nutrition
A worldwide leader in animal and human nutrition, Archer-Daniels-Midland Company (ADM) operates in various agricultural businesses, including ag services, oilseeds, carbohydrate solutions, and nutrition. ADM's products, including flours, grains, starches, and sweeteners, cater to human nutrition, animal feeds, and pet foods.
Investing in Alternatives
Investors can't directly invest in Cargill unless they are eligible employees. To capitalize on the same factors driving Cargill's growth, investors can turn to publicly traded competitors, such as Archer-Daniels-Midland or Bunge, or consider investing in a company built on Cargill's legacy, like Mosaic.
To invest in these alternatives, individuals need to follow these steps:
- Open a brokerage account
- Determine an investment budget
- Research companies before purchasing
- Place an order
Profitability
Cargill's consistent profitability is a testament to its ability to remain private, generating $160 billion in revenue during its latest fiscal year and boasting a net income of $2.5 billion. Despite a decline in profitability in their 2024 fiscal year, Cargill is still a profitable company, contributing to its long-standing status in the agricultural industry.
In conclusion, Cargill's position as the nation's largest privately held company secures its dominance in the agricultural industry. Investors have ample opportunities to capitalize on the same factors driving Cargill's growth by investing in publicly traded competitors or companies with similar legacies, like Mosaic.
- Despite its private status, Cargill has found innovative ways to allow shareholders to invest their money, such as the employee stock purchase plan initiated in 1993.
- Investors who are unable to directly invest in Cargill can consider investing in companies like The Mosaic Company, a spin-off of Cargill's fertilizer business, which provides an interest in its legacy business.
