A Review of Two Dutch ADRs: Reed Elsevier and CNH Global

 |  Includes: CNH, ENL, RELX
by: David Hunkar

The Netherlands is home to the world’s oldest stock exchange, the Amsterdam Stock Exchange. The country has the 16th largest economy in the world and The Economist magazine ranked The Netherlands as the fourth most democratic country in the world in 2008 (Source: Wikipedia). The famous 'tulip mania bubble' occurred during the 16th century when speculations on tulip bulb prices lead to a bubble comparable to the 'dot com' bubble, the housing bubble and other recent bubbles. During tulip mania, speculations in tulip bulbs reached so high that an extremely hard-to-find color tulip flower bulb was valued higher than the value of a house.

As a former colonial power, the Dutch government always encouraged the growth of private enterprises. Following that long and famous tradition, Holland today has some of the most innovative and largest global corporations in the world such as Royal Dutch Shell (NYSE:RDS.A), Unilver (NYSE:UN), Phillips Elctronics (NYSE:PHG), ING Groep (NYSE:ING).

In this post, let's take a look at two smaller Dutch companies: Reed Elsevier NV and CNH Global.

1. Reed Elsevier NV (RUK) (NYSE:ENL) is in the publishing industry, providing information to medical, legal and other businesses. ”The Company’s businesses provide products and services that are organized in four business divisions: Elsevier serves the science and medical sector; LexisNexis, the legal and other professional sectors, Reed Exhibitions, the exhibitions and conferences sector; and Reed Business Information, the trade magazines and information business sector.” Lexis Nexis is the preferred research source for lawyers and university academics, as well as students. Lexis Nexis charges a hefty price for annual subscriptions. They also own ChoicePoint, another consumer information provider in the US.

Reed offers a yield of 6.67% and has a market cap of about $7B. The profit margin is around 9%. Annual revenue in the past 5 years has been flat.

2. CNH Global (NYSE:CNH) is a construction and agricultural machinery maker and sells its products in 170 countries around the world. As per the corporate site “One in three combine harvesters and backhoe loaders, one in four tractors and skid steer loaders sold worldwide come from CNH.”

CNH is wholly owned by Fiat Spa, the leading Italian auto group.

When food prices rose dramatically in 2007 and the whole agricultural sector was on fire, CNH reached a peak of $70. This past Friday the stock closed at $11.88. Annual dividend growth is about 12%. The current yield is 4.21%. In the latest general meeting, the board approved the suspension of the payment of common dividends for the fiscal year ended December 31, 2008.