Core Insights - The Mosaic Company (NYSE:MOS) has garnered significant hedge fund interest, making it one of the top 12 commodity stocks to consider for investment [1] - Goldman Sachs maintains a "Buy" rating on The Mosaic Company but has reduced its price target from $37 to $33 following the company's Q3 2025 results [2] - The company reported a substantial increase in net income for Q3, rising to $411 million from $122 million year-over-year, and adjusted EBITDA increased to $806 million from $448 million [3] Financial Performance - The Mosaic Company's Q3 performance showed a significant turnaround, with net income reaching $411 million, a notable increase from $122 million in the same quarter of the previous year [3] - Adjusted EBITDA for the quarter rose to $806 million, up from $448 million, driven by strong realizations and effective cost control [3] - The company experienced higher inventory levels and pricing, leading to an increase of over $400 million in working capital, while operating cash flow was reported at $229 million [4] Future Outlook - The Mosaic Company aims to achieve $250 million in cost savings by 2026, having already recorded $150 million in initial reductions [5] - The company expresses confidence in its resilience in Brazil despite credit challenges, with expectations of improved asset health in phosphate operations supporting stable production levels in 2026 [5] Company Overview - The Mosaic Company is a producer of phosphate and potash crop nutrients, serving customers across North and South America as well as international markets [6]

Market Overview - The current market environment is characterized by changing global supply, demand, and investor sentiment, with precious metals leading gains alongside industrial metals, as indicated by a 10% increase in the Bloomberg Commodity Index (BCOM) as of November 19, 2025 [2] - Four out of six BCOM sectors reported gains in Q3, while petroleum rose by 4%, with grains and energy sectors being exceptions [2] - China's major commodity imports eased in October, with iron ore showing resilience despite declines in crude oil, natural gas, and coal [3] - The World Bank's Commodity Markets Outlook predicts a 7% decline in global commodity prices in 2026 due to subdued economic activity, trade tensions, and excess oil supplies, while precious metals are expected to grow by 5% [4] LNG Supply Growth - Global LNG supply is projected to grow by 10.2% in 2026, driven by U.S. expansions, with capacity expected to rise to 130 million tons in 2026 from 90 million tons in 2024 [5] Investment Strategy - The list of the 12 best commodity stocks is curated based on hedge fund interest, utilizing data from Insider Monkey's hedge fund database, which tracks 983 stocks as of Q2 2025 [8] - Research indicates that imitating top stock picks of leading hedge funds can lead to market outperformance [9] Company Highlights Air Products and Chemicals, Inc. (NYSE:APD) - Air Products and Chemicals, Inc. is among the top commodity stocks, with 53 hedge fund holders [11] - The company reported Q4 FY25 EPS of $3.39, slightly above the forecast of $3.38, with a full-year EPS of $12.03, down 3% year-over-year [13] - Management highlighted a focus on cost-reset strategies, including a 16% workforce reduction, and stable operating margins at 23.7% [13] - The NEOM green hydrogen project is nearly 90% complete, with expectations for ammonia output in 2027 [14] EOG Resources, Inc. (NYSE:EOG) - EOG Resources, Inc. also has 53 hedge fund holders and maintained a price target of $145 with a "Buy" rating [16] - The company reported Q3 net income of $1.5 billion and free cash flow of $1.4 billion, with adjusted EPS of $2.71 [17] - EOG returned $1 billion to shareholders through dividends and repurchases, with regular dividend payments increasing by 8% year-over-year [18] - The company raised its free cash flow guidance to $4.5 billion, ending the quarter with $3.5 billion in cash [19] The Mosaic Company (NYSE:MOS) - The Mosaic Company has 54 hedge fund holders and received a "Buy" rating from Goldman Sachs, with a lowered price target from $37 to $33 [21][22] - The company reported Q3 net income of $411 million, up from $122 million year-over-year, and adjusted EBITDA of $806 million [23] - Mosaic aims to achieve $250 million in cost savings by 2026, having already recorded $150 million in reductions [25]

Core Points - The Mosaic Company announced a quarterly dividend of $0.22 per share on its common stock [1] - The dividend payment date is set for December 18, 2025, for stockholders of record as of December 4, 2025 [1]

Market Overview - December is historically a strong month for stock purchases due to holiday shopping and corporate budget utilization, with markets ending December higher 75% of the time since the 1950s [1] - The S&P 500 has risen 15% this year, driven by strong corporate earnings, although there are concerns about a potential downturn in 2026 [2] Presidential Cycle Impact - Historical data shows that Year 2 of a presidential term often results in lower stock returns, averaging only 3.3% compared to 9.7% in other years, with significant declines observed in the second year of both Trump and Biden administrations [4][5] Economic Conditions - U.S. economic growth is increasingly concentrated in a few AI firms, with 92% of GDP growth in the first half of 2025 attributed to AI-related investments, negatively impacting other sectors like real estate and healthcare [6] - Consumer confidence is at record lows, with a projected 11% decline in average holiday gift spending for 2025, particularly among Gen Z [7] Corporate Layoffs - Major corporations are initiating significant layoffs, reminiscent of 2022, with Amazon cutting 14,000 jobs and Verizon reducing its workforce by 15%, indicating a shift in market conditions [8] Investment Opportunities - Despite market volatility, certain stocks are attracting "smart money" buyers, with notable insider purchases indicating potential value [9] - Bloomin' Brands Inc. (BLMN) has seen significant insider buying, with shares trading below 6X forward earnings, suggesting a potential 100% rise in 2026 as markets favor low-priced value stocks [17][18][21] - Mosaic Co. (MOS) is positioned as a compelling value play in the fertilizer sector, with potash prices rising and a potential 40% upside if prices remain stable [22][25] Market Sentiment - Recent selloffs in major U.S. stock indexes highlight the fragility of high valuations, leading to panic selling among institutional investors while retail traders remain hopeful for recovery [27]

Group 1: Ariel Focus Fund Performance - The Ariel Focus Fund increased by 20.76% in Q3 2025, outperforming the Russell 1000 Value Index which gained 5.33% and the S&P 500 Index which returned 8.12% [1] - The significant increase in US equities was driven by the Federal Reserve's first rate cut, strong corporate earnings growth, and broadening market participation [1] Group 2: The Mosaic Company (NYSE:MOS) Overview - The Mosaic Company produces and markets concentrated phosphate and potash crop nutrients, with a market capitalization of $8.161 billion as of November 11, 2025 [2] - The stock experienced a one-month return of -13.90% and a 52-week loss of 1.80% [2] Group 3: Performance Analysis of The Mosaic Company - The Mosaic Company was the biggest detractor from the fund's performance due to an earnings miss following a strong share price run, with higher potash and phosphate prices offset by lower volumes and rising production costs [3] - Despite near-term pressures, phosphate markets are expected to remain tight through 2025 due to limited new supply, and the company is focused on cost discipline, free cash flow generation, and maintaining its investment-grade credit profile [3] Group 4: Financial Performance of The Mosaic Company - In Q3 2025, The Mosaic Company's net income increased to $411 million compared to $122 million in Q3 2024 [4] - The company is not among the 30 most popular stocks among hedge funds, with 54 hedge fund portfolios holding its stock at the end of Q2 2025, up from 48 in the previous quarter [4]

Core Insights - The Mosaic Company's stock has declined by 15-20% despite improvements both internally and externally, primarily due to near-term macroeconomic challenges [1] Company Research - The analyst has over 10 years of experience researching companies across various sectors, including commodities and technology, which aids in providing valuable insights [2] - The focus has shifted to a value investing-oriented YouTube channel after three years of blogging, with extensive research conducted on hundreds of companies, particularly in metals and mining [2] Analyst's Position - The analyst currently holds no stock or derivative positions in any mentioned companies but may consider initiating a long position in Mosaic within the next 72 hours [3]

Core Insights - The U.S. Department of the Interior added phosphate and potash to the Critical Minerals List on November 6, 2025, highlighting their importance in food production and national security [1] Company Perspective - Bruce Bodine, President and CEO of The Mosaic Company, emphasized that phosphate and potash production is vital for food security, linking it directly to national security [1]

Financial Performance - For the three months ended September 30, 2025, net sales increased to $3,452.1 million, a 23% increase from $2,810.9 million in the prior year[119] - Gross margin for the same period rose by 33% to $552.3 million, driven by higher average selling prices across all segments[120] - Operating earnings for the three months ended September 30, 2025, were $339.8 million, a significant increase of 194% compared to $115.4 million in the prior year[119] - Net income attributable to Mosaic for the nine months ended September 30, 2025, was $1,060.2 million, compared to a net loss of $5.9 million in the same period a year ago[128] - A foreign currency transaction gain of $301.3 million positively impacted net income for the nine months ended September 30, 2025, compared to a loss of $(267.3) million in the prior year[128] Segment Performance - The Phosphate segment's operating earnings for the three months ended September 30, 2025, were $102 million, up from $8 million in the prior year, supported by higher selling prices and sales volumes[122] - The Potash segment reported operating earnings of $229 million for the three months ended September 30, 2025, compared to $109 million in the prior year, benefiting from improved global supply conditions[123] - Mosaic Fertilizantes segment's operating earnings increased to $96 million for the three months ended September 30, 2025, from $56 million in the prior year, despite a slight decline in sales volumes[125] - The Phosphate segment's net sales increased to $1.3 billion for the three months ended September 30, 2025, up from $1.0 billion in the same period of 2024, driven by higher average finished goods sales prices contributing approximately $210 million[135] - The Potash segment's net sales reached $694.8 million for the three months ended September 30, 2025, a 32% increase from $525.7 million in the same period of 2024[149] - The Mosaic Fertilizantes segment's net sales increased to $1.6 billion for the three months ended September 30, 2025, from $1.4 billion during the same period of the prior year, driven by higher finished product sales prices[164] Pricing and Costs - Average finished product selling price rose 23% to $712 per tonne for the three months ended September 30, 2025, compared to $579 per tonne in the prior year[136] - The average finished product selling price for the Potash segment was $278 per tonne for the three months ended September 30, 2025, compared to $233 per tonne for the same period last year[151] - The average finished product selling price for the Mosaic Fertilizantes segment was $518 per tonne for the three months ended September 30, 2025, compared to $447 per tonne for the same period a year ago[165] - The average consumed price for ammonia decreased 6% to $455 per tonne for the three months ended September 30, 2025, while the average consumed sulfur price increased 116% to $272 per long ton[139] - The average consumed cost of purchased and produced phosphate rock decreased to $80 per tonne for the three months ended September 30, 2025, down from $87 per tonne in the prior year[140] Operational Metrics - The Phosphate segment's production of crop nutrient dry concentrates and animal feed ingredients increased 3% for the three months ended September 30, 2025, resulting in an operating rate of 68%[141] - The production of crop nutrient dry concentrates and animal feed ingredients for the Mosaic Fertilizantes segment increased by 6% for the three months ended September 30, 2025, compared to the prior year period[169] Expenses and Financial Position - Selling, general and administrative expenses for the nine months increased by $31.9 million, primarily due to higher incentive compensation and employee benefit costs of approximately $27 million[181] - Other operating expenses decreased to $221.3 million from $305.0 million in the prior year, mainly due to timing of annual asset retirement obligation adjustments[183] - Net interest expense for the nine months increased to $139.3 million from $136.1 million, attributed to higher short-term debt levels[185] - Cash and cash equivalents as of September 30, 2025, were $153.3 million, with short-term debt of $1.2 billion and long-term debt of approximately $3.4 billion[195] - Net cash provided by operating activities was $880.9 million, down 18% from $1,079.9 million in the prior year[198] Capital and Financing Activities - Capital expenditures for the nine months were $1,009.8 million, compared to $957.7 million in the prior year[201] - Net cash used in financing activities for the nine months ended September 30, 2025, was $9.4 million, a significant decrease from $168.6 million for the same period in the prior year[202] - Dividends paid during the nine months ended September 30, 2025, totaled $210.5 million, with long-term debt payments net of borrowings amounting to $49.8 million[202] Risk Management - The company is exposed to fluctuations in the relative value of currencies, interest rates, and commodity prices, and uses derivatives to mitigate these risks[212] - The company has significant foreign currency exposures primarily to the Canadian dollar and Brazilian real, utilizing financial instruments to hedge these risks[213] - The company anticipates potential changes in trade policies and economic conditions that could impact its operations and financial performance[208] - The company is subject to financial assurance requirements in various jurisdictions, including Florida and Louisiana, which may affect its operational flexibility[204]

Financial Data and Key Metrics Changes - Net income for Q3 2025 increased to $411 million compared to $122 million in the prior year [6] - Adjusted EBITDA rose to $806 million from $448 million year over year, driven by higher prices across all segments [6] - Cash flow from operations was $229 million for Q3, impacted by over $400 million increase in working capital [21][22] Business Line Data and Key Metrics Changes - U.S. phosphate production improved sequentially, with trailing three-month production volumes reaching approximately 1.8 million tons [9][31] - Mosaic Fertilizantes showed excellent performance with adjusted EBITDA increasing year over year despite a challenging credit environment [5][10] - Potash production cash cost per ton decreased from $75 in Q2 to $71 in Q3, with expectations for Q4 unit costs to remain similar [19] Market Data and Key Metrics Changes - Phosphate markets remain tight due to global supply constraints, with prices elevated despite recent moderation [6][13] - Potash markets are balanced, with strong demand driven by affordability, particularly in China and Southeast Asia [8][14] - Brazilian fertilizer demand is expected to grow as growers replenish soils and expand acreage [12] Company Strategy and Development Direction - The company is focused on achieving reliable production, leveraging market access, and executing a capital reallocation strategy to create shareholder value [4][5] - Recent investments in the Taquari Potash Mine and Patos de Minas asset reflect a commitment to redeploy capital toward higher return opportunities [5][24] - The company anticipates a strong finish to 2025 and a promising outlook for 2026, driven by strong agricultural fundamentals [11][16] Management's Comments on Operating Environment and Future Outlook - Management highlighted the resilience of the business in a dynamic market and geopolitical environment, with a focus on consistent performance [4] - There are concerns about fertilizer affordability impacting grower purchasing behavior, particularly in the U.S. and Brazil [7][12] - Management expressed optimism about the future, citing strong crop yields and the need for nutrient replenishment [9][16] Other Important Information - The company achieved $150 million in initial cost savings and is on track to reach a revised target of $250 million by the end of 2026 [5] - Cash conversion rates are expected to improve significantly in 2026 as raw material prices stabilize and phosphate rock inventories are consumed [22][46] - The company is actively engaged in discussions regarding non-core asset sales and capital reallocation, with several strategic talks ongoing [24] Q&A Session Summary Question: Update on production performance after September issues - Management confirmed commitment to achieving normalized production rates, with recent improvements noted despite some delays [28][30] Question: Difference between good and bad production days - The distinction is now based on operational decision-making rather than structural asset health, with a focus on consistency in operations [34][35] Question: Clarification on phosphate run rate and margins - The current phosphate run rate is approximately 1.8 million tons, with expectations for improved margins as production increases [37][39] Question: Cash flow and CapEx outlook - Cash flow conversion is expected to improve in 2026, with a focus on reducing capital expenditures [43][46] Question: Impact of sulfur prices on phosphate margins - Stripping margins are expected to decline due to rising raw material costs, but remain above historical norms [75][76] Question: Implications of phosphate being added to the critical minerals list - Management is advocating for streamlined regulatory frameworks to enhance competitiveness and supply within North America [81][82]

Third Quarter 2025 Performance - Consolidated Revenues reached $3452 million[6] - Net Income was $340 million[6] - Operating Earnings totaled $411 million[6] - Adjusted EBITDA was $806 million[6] Segment Results - **Phosphate:** Net Revenues were $1290 million, Adjusted EBITDA was $280 million, and Operating Earnings were $102 million[6] - **Potash:** Net Revenues were $695 million, Adjusted EBITDA was $329 million, and Operating Earnings were $229 million[6] - **Mosaic Fertilizantes:** Net Revenues were $1592 million, Adjusted EBITDA was $241 million, and Operating Earnings were $96 million[6] Phosphate Division - Phosphate division realized stripping margin in excess of $500 per tonne[9] - Phosphate division Q3 idle and turnaround expenses declined from $84 million in Q2 to $42 million[9] - Phosphate division trailing 3-month period ending October reached approximately 18 million tonnes[9] Potash Division - Potash division Q3 MOP cash cost of production declined by 4% from $74 to $71 per tonne[12] - Potash division Q3 idle and turnaround declined to $16M from $34M in the second quarter[12] Mosaic Fertilizantes Division - Mosaic Fertilizantes division Adjusted EBITDA of $241M, up 190% compared to the prior year[15] - Mosaic Fertilizantes division recovered $27M in Q3 against bad debt in prior quarter[15]