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Strategies & Market Trends : Value Investing

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To: E_K_S who wrote (32759)	11/13/2008 5:35:27 PM
From: Jurgis Bekepuris	Read Replies (1) of 78666

Would you want to elaborate on DD? I held it but decided to sell it. It has some OK businesses and some really crappy businesses. The problem is that crappy businesses will drag the results of good businesses down in every kind of market. Net margin is about ~10% which is OK for this kind of company, but overall not very impressive. Morningstar claims that it has zero moat - probably true for its lousy businesses. Someone (Morningstar again?) claims that "DuPont has failed to earn its cost of capital in each of the last five years". ROE is 27%, but ROIC is only 17%. Even with current low price, the company does not offer exciting return looking forward. E.g. you could expect better return from PEP, MSFT, NKE, CSCO, WYE, which are all companies with huge moats. (PEP is overall probably one of the biggest moat companies in existence). So why would you buy DD instead of any of the above? ;) And I am not even comparing DD with really cheap, but perhaps more problematic companies.

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