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Why Does Everyone Hate Monsanto?

By Brian Orelli, PhD – Updated Apr 5, 2017 at 11:04PM

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Sometimes the mean guy wins.

The Associated Press ran an article chastising Monsanto (NYSE:MON) over the weekend. And reran it again on Monday. You know, to really make it sting.

While the article paints Monsanto as a rather mean company -- the agriculture giant even felt the need to issue a press release to respond -- I'm not sure investors should care. Perhaps they should even be smiling a little. The shrewd business practices are exactly what you'd want from a good investment.

Monsanto has become the giant that it is by licensing its gene traits to other seed companies. Is it ruthless in those negotiations? Absolutely, but that's what we'd expect from a company protecting its intellectual property. No one is forcing small seed companies to license the traits. They want to because Monsanto has useful traits like Roundup Ready that farmers want. Better products cost more.

The Associated Press and DuPont (NYSE:DD) take issue with Monsanto using its licenses to limit competitors' traits that can be combined with Monsanto's traits. But again, it's Monsanto's intellectual property. The company has swapped licenses and combined traits with Dow Chemical (NYSE:DOW) and Syngenta (NYSE:SYT) when it's to its advantage. We don't force Pfizer (NYSE:PFE) and Merck (NYSE:MRK) to combine their cholesterol-lowering drugs, why would Monsanto want to combine traits if it wasn't in the best interest of the company?

Of course, one man's shrewd business practices are another man's antitrust violations. The Department of Justice is investigating the company and investors should factor that into their valuation. Still, it's not like Netscape took out Microsoft (NASDAQ:MSFT) even with regulators help.

You're free to hate Monsanto and refuse to invest in the company -- socially responsible investing and all. But you're missing a dominant company with a nice moat. The kind Buffett loves.

Socially responsible definitely isn't one of the 10 reasons Jim Mueller likes this stock.

Monsanto, Microsoft, and Pfizer are Motley Fool Inside Value picks. If you're interested in picking through the wreckage for possible turnaround candidates, you should have the Inside Value team on your side. Check it out for free with a 30-day trial.

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Syngenta is a Motley Fool Global Gains selection. Microsoft is a Motley Fool Options recommendation. The Fool has a disclosure policy.

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Stocks Mentioned

Monsanto Company Stock Quote
Monsanto Company
MON
Merck & Co., Inc. Stock Quote
Merck & Co., Inc.
MRK
$86.78 (-0.83%) $0.73
Microsoft Corporation Stock Quote
Microsoft Corporation
MSFT
$237.92 (-1.27%) $-3.06
Pfizer Inc. Stock Quote
Pfizer Inc.
PFE
$44.08 (-1.10%) $0.49
E. I. du Pont de Nemours and Company Stock Quote
E. I. du Pont de Nemours and Company
DD
DuPont de Nemours, Inc. Stock Quote
DuPont de Nemours, Inc.
DOW

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