Put Players Blast Mosaic Co (MOS) After Vale Deal

Mosaic Co (NYSE:MOS) said it will purchase Vale SA's (ADR) (NYSE:VALE) fertilizer division, sending MOS stock lower

Karee Venema
Dec 19, 2016 at 2:46 PM
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Shares of Mosaic Co (NYSE:MOS) are selling off today, after the fertilizer firm announced a $2.5 billion M&A deal with sector peer Vale SA (ADR) (NYSE:VALE). At last check, MOS stock was trading down 6.4% at $27.67, and put volume is accelerated. Specifically, 6,616 MOS puts have traded so far -- two times what's typically seen at this point in the day, and outstripping the number of calls on the tape.

Today's faster-than-usual put volume just echoes the withstanding trend seen in MOS' options pits, though. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 50-day put/call volume ratio of 1.09 ranks in the 86th annual percentile. Simply stated, puts have been bought to open over calls at a quicker-than-typical pace in recent months.

This skepticism is seen outside of the options pits, too. Although short interest is down nearly 19% since hitting a record peak in mid-October, it still accounts for a healthy 10.7% of the equity's available float -- or 8.2 times the average pace of trading. Plus, 12 of 13 analysts maintain a "hold" or worse rating, while the average 12-month price target of $26.26 stands at a discount to current trading levels.

Granted, the stock has done little on the charts to warrant optimism from traders and analysts. In fact, MOS has repeatedly run into resistance from the overhead $31 mark, and despite hitting an annual high of $31.54 as recently as Dec. 9, the shares are up just 0.5% on the year. Plus, today's sell-off has brought Mosaic Co (NYSE:MOS) back below its 320-day moving average -- a trendline that contained the stock in the first half of 2015, but which MOS had previously managed to trade north of in December.

MOS daily since february 2015

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