A business strategy designed by Input Capital Corp. of Regina, Sask., can provide qualified farmers with fresh money for inputs and help from a science advisor. The managers believe the combined strategy could improve a farmer’s production skills for life. I recently spoke with Brad Farquhar and Gord Nystuen about Input Capital’s strategy.
Canola streamer business
If you’ve been following my column, you already know something about streamer companies like Silver Wheaton, Franco Nevada and Sandstorm.
Now Input Capital has developed what we call a canola streamer business. The program has two parts. One part is for producing farmers.
Input Capital advances cash to you, and you contract to sell some of your canola crop to Input Capital for the life of the contract. This allows farmers to stop relying on trade and bank credit and pay cash for fertilizer, chemicals and other inputs. Extra cash may allow farmers to buy and apply the crop inputs they need to improve the odds that their crops will yield to their genetic potential if growing conditions allow. It may be a chance to farm better and bigger, and fine-tune production skills.
Instead of collecting cash as payments on this advance, Input Capital takes part of the canola crop. The company can be flexible — if the canola crop doesn’t work out, they’ll accept another crop of similar value as payment.
The other part of Input Capital’s program is for investors like me, who buy shares in Input Capital — providing the cash they advance to producing farmers.
I bought $10,000 worth of shares in 2012.
Sometime this spring Input Capital expects to set up a reverse takeover with a listed publicly traded company. When the deal is complete, my $10,000 should be eligible for a contribution to an RRSP.
Brad and Gord encourage each farmer client to work with a science adviser, or agrologist. The agrologists evaluate the farm’s productivity and look for ways to improve yields and quality. While the cost of $4 to $5 an acre might scare some farmers off, Gord Nystuen says that’s less than half a bushel of canola per acre and not quite the price of a bushel of wheat. As productivity improves, Input Capital gets a small percentage of the increase in productivity on the contracted acres, but the vast majority of the increased productivity will stay with you.
If you’re considering getting involved, you should talk to Gord Nystuen to get the full details and the implications for your farm. You can find his contact information at www.inputcapital.com.
I want to congratulate Brad and Gord and their staff for coming up with this idea. With gold and silver, streamer companies are forging solid business relationships with up-and-coming mining businesses. I can see how this canola streamer business could kick start a farmer to a new level of management and knowledge. Over the coming years this could be a game changer for many farmers.
Stockcharts technical ranking (SCTR)
Years ago when I was reading a financial paper called Investor’s Business Daily, IBD ranked stocks according to how quickly the stock price was moving up. The ranking goes from zero to 100 and quickly shows how rapidly a stock has been going up compared to other stocks in the S&P or TSX indexes.
Now Stockcharts publishes this ranking system on its site (even on the free site). To get to the ranking system, go to www.stockcharts.com and click. You will come to the home page with all kinds of funny looking letters all over it.
Scroll down and you should see a box with a list of stocks in it with the letters SCTR either below or on the box with the list. You can click on any of the 10 stocks on that list.
If you move your cursor to the right of the screen, along the bottom you should find the words “Complete SCTR ranking system.” Go there and choose either the S&P or TSX and open the file to look at the whole list of stocks and their ranking.
If you want some free entertainment, go to that site and start either at the bottom or the top and work your way through the list. It could keep you busy for hours.
I’m sure there are different ways to use the rankings — I’ll give you my opinion. The speaker at our technical analysts meeting said we should look only at stocks that are in the top 10 per cent of the ranking system. I couldn’t hear the speaker very well but apparently she also said that if the price of a stock drops through the 10-day moving average going down, she sells. I have been gathering evidence on that combination and I totally agree.
Most of my precious metal stocks are dragging their butts along the bottom end of the SCTR table and I think that could be another opportunity. These days the operative words for many stocks are rotation, rotation, rotation. At least some of the time, stocks get rotated down. Stocks near the bottom get rotated up. It happened in the past three years and could well happen again.
I don’t think we can use the ranking system as a standalone indicator. I’m going to make a list of my favourite stocks, and once a week or so I will track the ranking system. The odds are very good that, as the ranking improves on a stock, the charts for the RSI (relative strength index), MACD (moving average convergence-divergence), price performance and full stochastic are going to start going up too.
Most charts show us how a stock is doing compared to itself. The SCTR ranking system shows us how the stock is doing compared to other stocks. If a stock doesn’t drop while the whole market is sliding into a tank, it might look great even if it’s standing still. †