Did not see this one coming but that does not mean it is a bad thing…
Archer Daniels Midland (ADM), the world’s largest biofuel producer has formed an industrial chemicals group with a focus on exponentially increasing ADM’s presence in industrial markets. The new business will take advantage of ADM’s processing expertise and global distribution network to expand ADM’s product offerings in industrial chemicals. The goal is for ADM to commercialize additional chemicals from renewable feedstocks.
“Renewable, biobased industrial chemicals fit into two major trends that we’re seeing in the marketplace: the desire to improve a product’s environmental footprint and the desire to reduce the use of petroleum-based products. In the short-term, we see opportunity to commercialize direct replacements for typically petroleum-derived chemicals. And in the longer-term, we see even more opportunities to develop new chemicals which provide increased functionality and are better for the environment. As one of the world’s largest processors of renewable feedstocks, ADM has a unique opportunity to succeed in this area,” said John Rice, executive vice president, Commercial and Production.
Interesting Hire:
To head the new business, ADM has hired Janet Mann as general manager, Industrial Chemicals, reporting to Rice. Mann joins ADM from Chemtura (CEM) where she was vice president and general manager, Performance Specialties. Mann previously served as business director for Dow Chemical (DOW) and executive vice president of Dow’s ANGUS Chemical subsidiary. She received a Master of Business Administration degree in finance from DePaul University and a Bachelor of Science degree in chemistry from Bradley University.
“The demand for biobased solutions is growing rapidly in the industrial segment. ADM has the assets and knowledge to commercialize many chemicals from renewable agricultural feedstocks, and I am very excited to join the team,” said Mann.
“Janet brings a deep understanding of the chemical and plastics industry to the ADM team. She has expertise in developing and implementing successful business strategies focused on growth in the chemical industry,” said Rice.
Now, two weeks ago I blogged on what Dow would find attractive in Chemtura’s portfolio and this move may be a sign that Mann is getting out before Dow takes over the specialties business there. Stay tuned…
As for ADM, this is great because it is opening yet another bio-based market for its products. Currently the leader is bio-fuels and bio-plastics, ADM now will enter the bio-chemicals arena. Any “bio” is a sure winner today and ADM is the first and largest player in that market. It will muddle the field for investors though. How will we value ADM? Is is a Ag Company? Energy? Specialty Chemical? What? The answer will be determined by the composition of earnings. One thing is for sure. They cannot be just lumped in with ethanol producers or food processors anymore. That valuation inadequacy will provide great opportunities at times so be both opportunistic when it is mis-valued and do not despair when the like happens.
They are entering a category of one here and that almost always is a very good place to be.
Greenie’s Book, Morningstar, Thank You, Sears Holdings
– It looks like Greenspan’s book isn’t going to be the big seller it was made out to be.
– Morningstar examine the investing styles a guess what comes out a winner?
– Thank you to NY Magazine for the mention.
– Here is another look at the potential real estate value in Sears Holdings (SHLD)
A dig into the recently released results buy Reynolds American (RAI) should be very encouraging to Altria (MO)shareholders
Back in April I said that Altria would not make an attempt to purchase UST (UST) for it smokeless products and instead would capitalize on the Marlboro brand name a produce one themselves. In August, when Altria announced they would do just that (produce a Marlboro product) I said that the smokeless product would be a huge hit in the growing “chew” market and provide a key drive for Phillip Morris USA going forward.
So what about Reynolds results should Altria holders like? On the conference call discussing their Q3 results. Reynolds commented on their smokeless product “Conwood Company, the nation’s second-largest maker of smokeless-tobacco products, had operating earnings of $90 million, up 18%, boosted by sales of Grizzly moist snuff. Conwood’s moist-snuff volume grew more than 12% from the prior year quarter.
Driving Conwood’s growth were additional gains on Grizzly, which continues to be the growth leader in the moist-snuff category. Grizzly’s volume was up 18%, more than twice the growth rate of the moist-snuff category. As a result, Grizzly’s share of market grew quarter-over-quarter and sequentially to 21.23%.
To further build on Grizzly’s momentum, Conwood will begin testing two new styles, Grizzly Pouches and Grizzly Snuff.”
Smokless is the only tobacco segment growing and it is growing at a very healthy clip. It is to the point now that companies are aggressively pursuing additional products to sell and the market is accepting them. Reynolds success will be Altria’s. When you have the number one tobacco product in Marlboro with almost 50% market share, any new product bearing that name will be used by consumers.
On another note, after the PMI spin, can’t we just change the name back to Phillip Morris?
After witnessing the success Amazon (AMZN) has had to date with its grocery delivery program, Wal-Mart(WMT) is following that model and entering the space.
Amazon, which currently undercuts local supermarket prices by some 30% at their online site ships bulk order of non-perishable items. Wal-Mart, whose service will be almost identical to Amazon and offer items like Perrier water, trade free coffee, Campbell’s(CPB) V-8 juice, Kellogg’s (K) snack bars, dried fruit and popcorn, as well other non-food items such as dish and body soap, will ship the items from their Sam’s Club division at prices 5% lower than those currently available at Amazon.
While amazon currently does not break out results of this division currently, the fact that they are testing expansion of the service to include a full line of grocery items in Seattle (HQ) would lead one to believe that it has been a success up to this point.
This is a good move for Wal-Mart as it is another growth avenue that will require minimal capital to enact. The items will be shipped by the post office or UPS (UPS) so no fleet of truck or delivery staff it needed until such a time they decide to do fresh foods (if ever). If nothing else, it is another reason for people to visit the Wal-Mart website and research has shown once there, people will buy something, even if it is not what they went there for in the first place.
UPGRADES
Sierra Wireless SWIR RBC Capital Mkts Sector Perform » Outperform
Western Refining WNR Banc of America Sec Sell » Neutral
Ikanos Comms IKAN Needham & Co Hold » Buy
Vistaprint VPRT Needham & Co Hold » Buy
Aetna AET Citigroup Hold » Buy
Panacos Pharma PANC Caris & Company Average » Buy
Sierra Wireless SWIR Piper Jaffray Market Perform » Outperform
DeVRY DV Bear Stearns Peer Perform » Outperform
Cummins CMI Credit Suisse Neutral » Outperform
Digital River DRIV BMO Capital Markets Market Perform » Outperform
Cummins CMI Citigroup Sell » Hold
Alexion Pharm ALXN Credit Suisse Neutral » Outperform
Foundry Ntwks FDRY JMP Securities Mkt Underperform » Mkt Perform
Novatel Wireless NVTL JMP Securities Mkt Perform » Mkt Outperform
DeVRY DV Piper Jaffray Market Perform » Outperform
General Mills GIS Deutsche Securities Hold » Buy
Hess HES Banc of America Sec Neutral » Buy
Taiwan Semi TSM HSBC Securities Neutral » Overweight
Discover Financial Services DFS Calyon Securities Neutral » Buy
Methanex MEOH CIBC Wrld Mkts Sector Underperform » Sector Perform
Blue Nile NILE Citigroup Sell » Hold
Nuance Communications NUAN Broadpoint Capital Neutral » Buy
Banco Santander Central STD Citigroup Hold » Buy
Infinity Prpty & Casualty IPCC Ferris Baker Watts Neutral » Buy
Corp Exec Bd EXBD Deutsche Securities Hold » Buy
DOWNGRADES
Zimmer Hldgs ZMH FTN Midwest Buy » Neutral
Covance CVD First Analysis Sec Overweight » Equal-Weight
Activision ATVI Janco Partners Accumulate » Mkt Perform
LSI Logic LSI Lehman Brothers Overweight » Equal-weight
Trident Microsystems TRID Longbow Buy » Neutral
Providence Service Corp PRSC Jefferies & Co Buy » Hold
Trident Microsystems TRID Needham & Co Strong Buy » Buy
CSG Systems CSGS First Analysis Sec Equal-Weight » Underweight
Avid Tech AVID Kaufman Bros Buy » Hold
Comcast CMCSA CIBC Wrld Mkts Sector Outperform » Sector Perform
Eli Lilly LLY Banc of America Sec Buy » Neutral
Level 3 LVLT JP Morgan Overweight » Neutral
Online Resources ORCC CIBC Wrld Mkts Sector Outperform » Sector Perform
Power Integrations POWI Citigroup Buy » Hold
eTelecare ETEL JMP Securities Mkt Outperform » Mkt Perform
LIFE TIME Fitness LTM Piper Jaffray Outperform » Market Perform
Penn Natl Gaming PENN Jefferies & Co Buy » Hold
Oil States OIS RBC Capital Mkts Outperform » Sector Perform
Tumbleweed Comms TMWD Roth Capital Buy » Hold
Bunge BG HSBC Securities Overweight » Neutral
MoneyGram MGI Calyon Securities Neutral » Reduce
AXT Inc AXTI Roth Capital Buy » Hold
Diamond Offshore DO Calyon Securities Add » Neutral
Trident Microsystems TRID Jefferies & Co Buy » Hold
I just the love the way these things are phrased
After writing off twice the amount pre-announced and having unauthorizes merger discussions with Wachovia (WB), Merill’s (MER) CEO Stan O’Neal has “decided” to leave the firm according to sources. On Friday I speculated “O’Neal may have been trying to negotiate himself a nice buyout severance package knowing what was coming down the pike.” It turns out there is quite a bit of truth to that. According to Merrill’s proxy, O’Neal would be entitled to about $200 million in total severance were Merrill sold or merged but should he decide to leave or be fired, his renumeration would be a fraction of that. One can only assume the Wachovia overtures were a desperate attempt on O’Neal’s part to walk away with as much in his pocket as possible.
For his part Wachovia CEO G. Kennedy Thompson said that “the timing was not right” as the bank is currently digesting other acquisitions.
Leading candidates for his job are Blackrock’s (BLK) Larry Fink and and the NYSE exchange President and former Goldman Sachs C0-President (GS)John Thain although it is unclear if either would be interested. One would be hard pressed to think Fink would not and Thain would be as has a nice place for himself at the NYSE.
Either way, isn’t nice of Fink to walk away for the mess he made without a struggle?
“While we are extremely proud of our strong track record in the wholesale business, we believe our long-term opportunity lies in maximizing our more competitive retail channels by introducing innovative products that meet the needs of Bank of America customers, ” says Floyd Robinson, president of Bank of America (BAC) consumer real estate.
Last week, BAC reported third-quarter earnings of 82 cents per share, a 32% decrease from a year ago. They then announced they would cut some 3,000 jobs, representing less than 2% of the company’s total employment. The majority of the layoffs will be in global corporate and investment banking. Continued disruptions in the credit market shellacked BAC’s global corporate and investment banking unit, where net income fell to $100 million, a 93 percent drop from $1.43 billion a year ago.
Cutting the investment banking jobs does make sense since that sector is slowing in general and cuts are happening industry wide. But, to completely exit the wholesale business is a bit much. It can be a profitable sector is run correctly and with a certain degree of restraint. The problem is not that the business s bad, but that those running it took unnecessary risks and got nailed.
With lenders like Countrywide (CFC) and Thornburg Mortgage (TMA) predicting greener pastures in the near future (next quarter), it looks as though BAC may be exiting this business just as it begins to turn around. Contrast this to recent news out of Wachovia (WB) who witnessed similar results in these areas but vowed to stay the course and heighten risk management to improve results, not give up on the business.
Personally, I have not seen too many examples of financial institutions shrinking their way to improved growth.
Monday’s Picks
Jeff Macke liked Intel (INTC). Open $25.94
Guy Adami preferred Dell (DELL). Open $28.98
Karen Finerman recommended shorting the United States Oil Fund (USO). Open $71.17
Pete Najarian said Baker Hughes (BHI) is a buy. Open $91.05
Friday’s Results
Jeff Macke recommended Activision (ATVI). Open $22.95 Close$ 23.67 GAIN
Guy Adami “still likes” Intel (INTC). Open $25.89 Close $25.94 GAIN
Karen Finerman would own Estee Lauder (EL). Open $44.72 Close $41.11 GAIN
Pete Najarian recommended Under Armour (UA). Open $56.85 Close $59.57 GAIN
Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation weeks). The percentage is the percentage of successful picks
Guy Adami= 37-23 = 62%
John Najarian= 13-4 = 76%
Jeff Macke= 42-31 = 56%
Pete Najarian= 29-24 = 54%
Tim Seymore= 4-3 = 57%
Karen Finerman= 21-12 = 62%
Stacey Briere-Gilbert= 3-0 = 100
Ned Riley= 1-0 = 100%
Carter Worth= 0-1 = 0%
“We never buy stocks when we see prices soaring,” Berkshire Hathaway’s (BRK.A) Warren Buffett told reporters while on a visit to northeastern China Wednesday. “We buy stocks because we’re confident of the company’s growth. People should be cautious when they see prices rising.”
He clarified the comments on CNBC saying “I, just said that we very seldom buy into a market that’s gone up a whole lot, and I don’t know anything real specific about the Chinese market or Chinese stocks. But I do know that when prices have gone up a whole lot then I’m more skeptical when they’ve gone down a whole lot. I really like the look of markets that have gone down rather than markets that have gone up. But I will say this, what I’ve seen in China just today, in terms of the industrial development in Dalian, is making a believer in me, certainly in the economy, but that doesn’t mean that I think the stocks are attractive.”
Buffett is always asked about his outlook for either a company, the US market, the dollar or just about anything else short of who will win the World Series (the Red Sox will). His almost pat answer is “I have no idea what will happen, I am smart enough to know what I do not know”.
Why does this matter? When Buffett actually comes out and says something, we would be well advised to listen because the outcome most likely very closely related to his thought process. China stock, not necessarily the economy are approaching or are already in a “frothy” phase and that poses dramatic risk to investors. When you add the difficulty actually valuing securities from China, you now have a significant risk to investors. There will be a bunch of implosions of securities being sold today, that is inevitable in this environment. Buffett’s warning is that the number may end up being much larger than people currently anticipate..
Largest Increases: Betting stock will go down (number of shares)
Level Three Communications (LVLT)= 9,989,000
Network Appliance (NTAP)= 8,793,000
Yahoo!! (YHOO)= 6,303,000
RF Micro (RFMD)= 5,129,000
BEA (BEA)= 3,997,000
Largest Decreases: Covering positions in anticipation of a raise in shares
Sun Microsystems (JAVA)= 24,605,000
Nvidia (NVDA)= 6,484,000
Microsoft (MSFT)= 5,504,000
Comcast (CMCSA)= 4,912,000
Dell (DELL)= 4,236,000
Oracle (ORCL)= 2,870,000
Video footage of Warren Buffett talking about the economy with FOX Business anchor Liz Claman.
George reviews Vitaliy’s Active Value Investing.
Excerpt:”I highly recommend that you read Chapter 12: Sell Process – Make Darwin Proud, if you read anything in this book. This chapter was a wake-up call to me. I don’t have a really good sell process and the one Vitaliy presents is very logical and seems to be the key to achieving good investment performance in a range-bound market.”
Buffett talks about how GEICO was his best investment.
Commentary on Sears Holdings and why Eddie Lampert can’t buy back shares fast enough.
Chapter 18: Mosaic Perspectives on Investing by Mohnish Pabrai
Chapter 19: Mosaic Perspectives on Investing by Mohnish Pabrai
An interview with Vitaliy Katsenelson about his new book Active Value Investing.
Warren Buffett tells FOX Business anchor Liz Claman the rumors he was interested in Bear Stearns were false.
Warren Buffett tells FOX Business anchor Liz Claman a succession plan is in place. Apparently, Buffett has selected four candidates for the board to consider. All four manage large sums of money. I thought is was disappointing to hear that none of them will be starting before Buffett leaves his position.
USAK USA Truck Inc 13.17
TSCO Tractor Supply Co 41.53
TRID Trident Microsystems Inc 7.27
TPTX Torreypines Therapeut … 4.32
SMTK Simtek Corp 3.35
RUTH Ruths Chris Steak Hse Inc 12.75
RMIX U S Concrete Inc 5.23
RES RPC, Inc 11.02
PTEN Patterson Uti Energy Inc 19.73
MGI Moneygram Intl Inc 15.69
MFBC MFB Corp 28.25
MDS Midas Group Inc 16.43
MCRL Micrel Incorporated 8.74
MBWM Mercantile Bank Corp 18.99
MAXE Max & Ermas Restauran … 3.75
KRO Kronos Worldwide Inc 15.25
FFSX First Fed Bankshares … 16.07
FFEX Frozen Food Express I … 6.27
FFBH First Federal Bancsha … 16.60
FBIZ First Bus Finl Svcs I … 17.66
FAV First Tr Active Divid … 20.00
DLIA Delia S Inc New 3.48
DFT Dupont Fabros Technol … 21.01
