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Is Something Brewing at Archer Daniels Midland?

Donald E.L. Johnson,

This is NOT insider trading. Everything that ADM has done in the past and is doing now is in full view of the publics scrutiny. If you (not you personally) choose to misinterpret or ignore the information, this is not ADM's responsibility to correct.

The 3.8% drop today is the markets way of signaling that it has understood the message. Issuing equity for the sake of paying off previously accumulated debt is dilution by core definition.

On the other hand, issuing equity for the purpose of making a new acquisition is replacing one asset with another so to speak, and is not necessarily dilutive by nature unless there is a large amount of goodwill or excessive premiums built in to the transaction.

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Is Something Brewing at Archer Daniels Midland?

Sorry Todd. Disagree with you on this one. ADM is simply shoring up its balance sheet by placing all the share buybacks back on the market at a profit.
See:
www.crossprofit.com/ar...

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War With Iran? Good Time To Buy Alternative Energy Stocks.

Alternative energy is not something that can readily take advantage of sporadic supply disruptions. None of the companies you mention above can sell one dollar more if there is an attack. All alternative energy investments are for a longer horizon. The only positive outcome might be in the form of certain European governments possibly speeding up the investment process in heavily subsidized solar energy projects. Even that is not a given.

Disclosure: Opinion of a CrossProfit analyst and may not be the opinion of CrossProfit.com.

Everything You Wanted To Know About Ethanol Production But Were Afraid To Ask (ADM, HKI, VSE)

Faisal-

Have you noticed that the New York Times finally picked up on what we discussed on SA.

SA readers got the info including our conclusion "according to my research the figure is closer to 25%" and all the rest on 6/16. NYT subscribers had to wait until 7/12 !!!

www.nytimes.com/2006/0...;oref=slogin

Everything You Wanted To Know About Ethanol Production But Were Afraid To Ask (ADM, HKI, VSE)

volcan kayar –

The link posted by Faisal Laljee in the comment above yours, quotes the Governments findings and questions its reliability.

Upon nearing completion of extensive research on the ethanol issue I conclude that (corn) ethanol will never replace oil. Even if the 34% energy gain figure is correct (according to my research the figure is closer to 25%) there is no way possible to bring this up to 150+% to start replacing oil.

A quick look at the global oil supply situation will reveal that things are about to get worse before they get better.

DEMAND>>...

Global consumption is increasing. China is only one component. On the unlikely event of a recession in China the Chinese consumption rate will still increase at least 3% per annum.

More realistically, Asia and Eastern Europe combined will consume an additional 2.5 million BPD in 3 to 4 years time!

SUPPLY>>...

Iraq: Most people think that now that Saddam Hussein has been removed that all of a sudden all Iraqis are pro west etc. The reality is that the Badr Brigade and the Iraqi police force are more politically in line with Hamas than with Washington. Sad but true.

Iran: It’s all about global power…
Just a few months ago the Iranian foreign minister declared that his country would never use oil as a weapon. This was great PR as many news agencies concluded that this was a sign that there would not be another 70’s style oil embargo. Lo and behold the Iranians have changed their tune… As the current (nuclear) showdown between the U.S. and Iran proceeds you can bet your bottom dollar that Iran will use oil as a bargaining chip - at the very least - to gain standing. The disingenuous calculating Iranians want partners/allies like…

Venezuela: An unnatural yet compelling ally of Iran. At present the fourth largest crude oil supplier to the U.S. Notice how the supply is gradually shifting away from the U.S. and going more to China. The ‘gradualism’ is a blessing in disguise.

ETHANOL>&gt...

Let’s take a totally hypothetical best case scenario.

1) The U.S. can domestically produce 40% of its oil consumption.
2) The entire production is miraculously transformed into ethanol with a 34% energy gain.
3) The U.S. now has 53.6% of its energy needs.

Obviously a 34% gain is insufficient. One wonders if all the capital being spent on ethanol would better be invested elsewhere. Solar power, hydrogen, windmills and hybrid cars will never make it in time to the finish line. This is why we are pushing ethanol. It is the only available technology that has a chance of making a dent on the looming energy crisis.

Or is it? Whilst researching ethanol I compared several other technologies that are either in development or are readily available. Interestingly enough is the fact that most major rivers in North America have currents that are strong enough to produce electricity efficiently. We are not talking about building dams. The technology entails placing turbines on the riverbed.

In conclusion, corn ethanol is an immediate ‘band aid’ technology with a limited life span. In the interim it is going to make money until more economically viable technologies take over. How long you ask? Probably for 5 to 10 years after the upcoming energy crunch.

I suspect that the entire ethanol episode is more in line with the Strategic Reserves scenario. Neither solve the energy problem yet both send a clear message that the United States will not be held hostage by energy suppliers.

Disclosure: This comment was written by a CrossProfit analyst. This is a personal opinion and may not reflect the opinion of CrossProfit.com.