Jan. 8, 2014, 10:34 AM
- "The Safety Bubble Deflates," goes the title of a new report from Bernstein's Seth Masters, adding his name to those voices suggesting "safe" assets have become otherwise.
- Even though utilities, telecom, and consumer staples have underperformed of late, says Masters, their relative valuations are still well above the average over the last 50 years. "In periods of stress, investors tend to prize stability and safety too much. But in time, investors discover that every investment carries with it some degree of risk: if not risk of loss, then risk of inadequate growth."
- Related ETFs: XLU, IDU, VPU, NLR, GRID, JXI, NUCL, DBU, IPU, RYU, PUI, UPW, FXU, SDP, PSCU, AXUT, FUTY, UTLT, XLP, VDC, FXG, RHS, FSTA, PSL, PSCC, IYZ, VOX, IXP, IST, XTL, LTL, FCOM, TLL, AXTE
- Barron's Jack Hough says the "low beta" approach is a flawed one: First, volatility can change quickly as companies' or industries' fortunes shift; Second, beta tells one nothing about whether a stock's valuation is high or low. In a similar warning over low volatility stocks, BAML suggests looking for companies with smooth earnings rather than smooth stock prices. Screening for such, Hough finds CSX Corp (CSX -0.6%), DuPont (DD +0.6%), Cisco (CSCO -0.6%), and Halliburton (HAL -0.8%).
- Low volatility ETFs: SPLV, USMV, ACWV
Dec. 28, 2013, 8:30 AM
- A tripling of the market over the last five years has made it a difficult environment for value investors looking for ideas, writes Tsachy Mishal; difficult, but not impossible. Mishal has recently put money to work in four new investments:
- Air Products & Chemicals (APD) has a lot more in common with Bill Ackman's successful moves than it does with boners like J.C. Penney and Herbalife, says Mishal. The appointment of a CEO in Q1 should be a catalyst, he says, as the new chief lays out his strategy and Ackman makes public his detailed investment thesis.
- Trading at a steep 20% discount to book value, Annaly Capital (NLY) is the victim of year-end tax-loss selling and the fear of the effect of higher rates on book value, says Mishal. But the year is nearly over, and Annaly management has lowered leverage, hedged its book, and diversified into CMBS - it's well-positioned against further rate increases.
- Eastman Chemical (EMN) has spent the past few quarters paying down debt from an acquisition, says Mishal, but starting in Q1 should begin using its ample cash flow to aggressively buy back stock. Management has an EPS goal of $7 in 2014 and $8 in 2015, and is on the record as saying acquisition targets are too expensive. That leaves share repurchases. Against his long in Eastman, Mishal is short ALB, CE, DD, DOW, and FMC.
- Municipal bond closed-end funds are getting it from both sides - fears of higher rates and credit worries. Throw tax-loss selling into the mix and many are now trading at near-10% discounts to NAV and yielding almost 7% - the taxable equivalent of over 10%. "Municipal bonds offer the best after-tax, risk-adjusted return of any asset class." He's long: NRK, VMO, VKQ, PMO, NAN.
Dec. 17, 2013, 2:08 AM
- Superior Court Judge James Kleinberg has tentatively ordered Sherwin-Williams (SHW), NL Industries (NL) and ConAgra Grocery Products (CAG) to pay $1.1B to replace or contain lead paint in millions of homes in California.
- However, Kleinberg dismissed the claims against two other defendants, BP (BP) unit Atlantic Richfield and DuPont (DD).
- The case was brought by 10 city and county governments in California, which argued that the lead is harmful to children. The substance has been banned in residential paint since 1978.
Nov. 21, 2013, 8:35 AM
- DuPont (DD) agrees to sell its Glass Laminating Solutions/Vinyls business to Kuraray for $543M plus the value of the inventories.
- GLS/Vinyls is a leading supplier of polyvinyl butyral and ionomer sheets for safety glass, and vinyl acetate monomer and polyvinyl alcohol products used in a variety of architectural, automotive and industrial applications; the business delivered 2012 net sales of more than $500M.
- DuPont has been working to move away from lower growth commodity businesses toward higher growth areas, including nutritional products and agriculture.
Nov. 8, 2013, 7:59 AM
- DuPont's (DD) agricultural seed unit of DuPont is teaming with Deere (DE) in a race against rival Monsanto (MON) to provide farmers with enhanced "precision agriculture" analyses aimed at maximizing crop production.
- The programs, which will roll out next year, will give farmers guidance on field management decisions including planting, crop treatment, pest control and even the best time to harvest.
- DuPont Pioneer has long counseled farmers on the best seed to plant for their particular farms, but the deal with Deere is the latest in a series of moves by both DD and rival MON to turn farm-related data analyses into new profit streams by incorporating analytics on an array of data points.
Oct. 25, 2013, 12:19 PM
- DuPont (DD +0.2%) is upgraded to Buy from Neutral with a $70 price target, up from $61, at Citigroup after news of the planned separation of the company's performance chemicals unit.
- The move could unlock value at DD by creating two companies more focused on heir core competencies and more nimble in decision making, the firm believes, and prompt investors to focus on other parts of DD's portfolio, lead to greater transparency at the segment level, and likely drive more accountability at both companies.
Oct. 24, 2013, 5:30 PM
Oct. 24, 2013, 4:58 PM
- DuPont (DD) +3.5% AH after announcing plans to spin off its performance chemicals segment into an independent, publicly-traded company 100% owned by DD shareholders.
- The company says the move, which had been sought by Wall Street, will allow it to better focus on the growth area of specialty materials and agriculture.
- The spinoff is expected to dent Q4 EPS by a cent or two.
Oct. 23, 2013, 12:39 PM
- DuPont (DD -0.2%) is upgraded to Overweight from Neutral with a $67 price target, up from $60, at J.P. Morgan while also raising its 2013 EPS estimate to $3.86 from $3.80 and its 2014 forecast to $4.36 from $4.25. (Q3 earnings)
- DuPont is a solid generator of free cash flow (estimated 6.4% for 2014), it is leveraged to acceleration in global economic growth, and it has a strong portfolio of businesses with favorable 2014 prospects, the firm says.
- Capital appreciation potential for 2014 is ~12%, which combined with a 3% dividend yields a 15% annual return, the firm says.
Oct. 22, 2013, 12:39 PM
- In DuPont's (DD +0.3%) Q3 earnings call, CEO Ellen Kullman says that despite the hit in performance chemicals operating earnings and an anticipated negative currency impact of more than $0.80/share, she anticipates overall FY 2013 earnings of $3.85/share.
- Kullman said DD is exploring several strategic alternatives for the unit, which generates significant cash but is subject to highly volatile markets; she did not provide details or a timeline for deciding the future of the unit, which could be sold or spun off.
- Performance chemicals' volume rose 12% but it was not enough to offset steep price declines for titanium dioxide, refrigerants and fluoropolymers, along with higher raw material inventory costs; the unit's operating earnings fell 38% to $254M.
Oct. 22, 2013, 7:16 AM
- Du Pont's (DD) net income climbs to $285M from $5M last year, when the company recorded charges related to severance and restructuring.
- Excluding Performance Chemicals, all operating segments posted increased operating earnings vs last year. Profit at Du Pont's electronics segment, which supplies metal pastes and other materials used in solar panels, surged 67%. Income at the safety and protection division +16%.
- Agriculture sales +15%, driven by increased insecticide volumes and higher seed prices in Latin America.
- Reiterates full-year operating EPS forecast for $3.85 a share vs consensus of $3.80.
- "While we expect overall sequential growth in industrial market demand will remain subdued, fourth quarter operating earnings will be up substantially from last year," Chair and CEO Ellen Kullman. "For the full year we are on track to deliver modest earnings growth, despite the significant decline in Performance Chemicals' results." (Previous) (PR)
Oct. 22, 2013, 6:01 AM
Oct. 22, 2013, 12:05 AM
Oct. 21, 2013, 5:30 PM
Oct. 17, 2013, 3:09 PM
- First screening for stocks with a dividend yield of at least 3%, payout ratios of less than 75%, low debt, and compounded annual income growth of 5%, the team narrows it further by selecting those least correlated (in a negative way) to higher Treasury yields and with little near-term debt maturing.
- The list of 20: ABBV, AEE, AJG, DD, ESV, EPD, GIS, HRB, HBHC, KRFT, LO, MMP, MWE, MCD, MCHP, NEE, REG, TU, WSTC, WMB.
Oct. 2, 2013, 12:38 PM
- The BP-DuPont (DD) Butamax joint venture is retrofitting an ethanol plant in Minnesota to make a successor renewable fuel, biobutanol, and plans to begin the first phase of commercial production in the next few months.
- "This is the next step in the road to commercialization,” Butamax CEO Paul Beckwith says.
- The JV says biobutanol has lower greenhouse gas emissions than corn-based ethanol and doesn’t present the same kind of refining issues.
E I du Pont de Nemours & Company is a science and engineering company that offers products and patents applications for agriculture, nutrition, electronics and communications, safety and protection, home and construction, transportation and apparel.
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