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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Spekulatius who wrote (47671)	4/28/2012 8:04:31 PM
From: E_K_S	Respond to of 78740

Re:SEB I somewhat agree with you that they own a slot of shipping assets that integrate well w/ their operations (only invest in their fleet to support their other operating divisions) and do not use too much if any debt when updating their fleet assets. In fact, much of last year's free flow cash was used to finance some major upgrades in their fleet. That said, it's a matter of deploying that free flow cash and at least last year, a very large percentage went into their shipping fleet. That cash could have been deployed in other more specific AG ventures like hog farms, purchasing more of Butterball Turkey or even some ventures into other grain mills located around the world (India, Africa etc). The company is still selling close to BV on my last check but per share earnings and FCF for 2011 was disappointing to me and missed my expectations (not sure what if any analysts follow this company). As a result, I had a pretty good gain and closed out my position in SEB and booked my gains. Their dividend is tiny compared to CAG , ADM or even BG. I also closed out my position in ADM and booked my gains but continue to hold BG and CAG (Note: CAG has the best dividend of the group). This was part of reducing my AG basket exposure by 20% in April 2012. I think both ADM and SEP can be had at lower prices (or at least before I buy them). I agree with you that for SEB, when you look at their shipping assets as a percentage of their total assets it's large so one could make the argument that the company should be priced at a lower PE to reflect this. On the flip side, it makes their other divisions more profitable when you look at the entire package. In general these AG companies (even the diversified ones) still are impacted by commodity prices and even w/ hedges, falling commodity prices tend to impact EPS to the negative side. I think the next 24 months prices will be flat to lower so only those AG companies that can provide a significant value added to the end products produced will EPS be higher. Of the companies I watch, BG may be the best candidate as they own processes that do add a lot of value to the end product. Therefore, as BG shares fall, I am more apt to buy this one of the group. FWIW, my goal is to increase my stock turnover rate to under 24 months than 36-40 months. I do not have time to wait out the cycle holding these stocks and/or hold during a down cycle. I will sell now (book my profits) and look to re-enter later if the value proposition is there. EKS