SEB has announced the sale of "third party commodity trading and shipping operations" to South Africa's Grindrod. According to a Bloomberg article, the operations accounted for $630 million of SEB revenue last year, or 23% of total SEB revenue.
ACcording to SEB, the asset sale "...will enable Seaboard to focus on its core milling operations and the efficiant supply of commodities to support these operations."
No price seems to have been given, but the article notes that publicly-traded Grindrod has an equity market value of 4.2 billion SAR (which the article translates to $64 million, which doesn't seem right to me off the top of my head).
The article also does not indicate the method of payment by Grindrod or the profitability of the operations being sold.
So, now we see the real reason for the huge runnup in SEB shares: the company has made a major realignment of its business structure, and apparently realized significnat value from this asset sale, which weill allow it to be more of a "pure play" and less of a conglomerate, perhaps allowing the P/E ratio to rise as a result.
Thanks for the reply timmerbee! I thought the article was very interesting and got me thinking about things I didn't consider (like the inverse relationship between raising profits (raising hogs , that is!) and processing profits. I hope I understand the relationship correctly. Anyway, thanks for the additional info. Compared to so many, this is really a great board... good stock relevant commentary and recipes to boot!
Nice day. Good luck to all!
the smithfields food thing is indeed a bit disconcerting. though i am loath to recommend anything written by Motely Fool, i thought this short item interesting (if you haven't read it already):
the SFD results are quite puzzling when contrasted to a similar reporting period for SEB, which had knockout performance. does it presage a downturn in the earnings of SEB at the next report?? wish i had a crystal ball or a magic mirror.
Blessings to y'all
I lived in Texas for 12 years so I can legally say y'all. :)
I need to apologize to everyone that has ever read my posts when I am quoting amounts of stocks being traded using Fidelity's Active TRADER Pro Time and Sales Chart. Most of the time when ever a volume of a stock is mentioned in any column, it is in units of 100's. I knew that SEB was an exception, and had been told buy an" expert" at Fidelity that it was units of 10 not 100's with SEB. Well, I was really excited when I was checking the report last week 5/31 around 1500 --- 1529 .Using 10's, you will deduce that over 140 Thousand shares had been put up for sale. WOW ! That would change things, but nothing happened . I just called Fidelity this morning and asked for a real " pro ". I explained my theory. He was unsure, so he called AMEX. They said that with SEB all numbers are actual shares . Not units of 10.
I think someone was trying to say that on this board last week, but with my mindset I let it flyby.
I sincerely apologize for speaking out of ignorance.
On the bright side there is still a lot of trading going on in the mid- 1300's. Right now I am thinking that I need to buy back in around 1350. Does any body sense that SEB could break through 1400 during the rally over the past 2 weeks or will we get a pullback to gain momentum?
Take care gentlemen. Its always an enjoyment to read this board. Refreshing during chaotic times.
Best Regards and Remember not only is this the first day of the rest of your life, it could also be the last day. You only get one minute at a time! Not only enjoy the fresh air and daisies, but take some time to figure out your relationship with the One who crated all things. If this should be your last day. the price of SEB will not matter to you, He will !
Any thoughts on the Smithfield Foods report? Do you think this will affect us? I realize we are more diversified, but I wasn't sure if this would be an indicator of the profitibility of the pork division for the next earnings.
Thanks in advance the the enlightening posts.
Good luck to all!
just wanted to point out that the Big Dip in share price was at the end of april, about a week before earnings were posted. i believe a large investor wanted to lock in some gains before the earnings report. hurray for that, i bought a bunch more.
i have to mention a wonderful ham recipe from belgium. not too suprisingly, belgian endives are very popular there, and a yummy treat is to braise endives, wrap each little endive in a piece of Black Forest ham, them cover with a little cheese sauce and make a gratin of them. a similar recipe can be found here:
I bought in last year around 475. I have done some trading to take advantage of the peaks and valleys. I don't know what happened in April. There was no news and I believe that second quarter earnings had been posted. I believe it was just a panic sell. When people stopped screaming and let the smoke drift away the price returned to normal. Could have been fueled by short sellers and agravated by sell stops being activated.
Sounds like you found a winner with that textile stock.
Re: SEB at the current price. It is now around 100 dollars above the last high prior to the big selloff. Normally this stock takes around 2 steps forward and one back. There is also the chance that there could be a break out and we could see a breakout up like we saw late last year when volume shot to 12k and the price climbed 200 dollars that day. I took profit on half my shares on tues @ 1350 thinking it would fall back into the 1200 range so I could strengthen my position, but the stock has been holding strong all week around 1340 to 1350. Hard to figure it out :)
I am interested in what the other guys have to say. Any seers out there?
It's always good to read your posts.
I have a question or two to ask?
With SEB making a new high today
would this stock be a good purchase?
Can't figure out why it closed at 855.00
on 4/29/05 and now 1,350.00.
For the year 2004 vs. 2003 Sales only grew
by less than 30% while earnings were 133.00
per share. I do realize only 1.2MM shares
outstanding. Pork, transportation, and
banking as per S&P. What is this banking
all about? Are you a holder of 3 years or
more? If yes, 3 years ago price was 400.00
now 1,300.00 or 3 X your investment.
On 4/8/05 this little known stock in the
textile industry was selling at .36 cents.
10,000 shares then cost 3,600.00. Today it
is trading @ 4.70, that is less than 2 months
time. I don't want to tout stocks. Then I ask
this question how much risk is there in
buying SEB at these prices?
It's good to see all the posting going on. For a while several months ago, we were lucky if there was one a week and a lot of those were mine.
I appreciate all the input re my portfolio. It will take a while to sort it all out. According to investor words.com iliquid = That which cannot quickly and easily be converted into cash, such as real estate, collectibles, and thinly traded securities. That is definition # 1 . definition # 2 is : A company which does not have sufficient cash flow to meet its operational needs and its debt obligations. opposite of liquid. I think it would be better to refer to SEB as thinly traded.
Re: Volatility = Having a high degree of volatility; i.e. characterized by large price movements; for example, a high-flyer. opposite of stable. I am not sure that we could accurately put SEB in this slot either. Look at a two or 3year chart. Very Flat till the middle of last year and since then it has been steadily climbing. Except for that large dip we had last month it looks great on paper. steadily climbing. If a fourty dollar stock has fluctuatons of 5 to 10 percent in a day, do we label it volatile?
How long it will last ? Good question. It would probably be wise to try and determine what would be a maximum and or stable P/E.
How low would earnings have to drop before people paniced? Using VV $199 EPS, if earnings were reduced to half say $100 it would still be a 1000 dollar stock with a P/E of only 10.
Again this is my perspective. I am always open to critique. I will close with a suggestion that I voiced last month. Since this board is a major PR instrument , I would suggest that subject titles that have negative connotation in them should be reworded. For example If someone posted with a subject of "Sell Now " .
And ten of us responded using the " Re: Sell now subject" Just imagine what the message list would look like. We would be taking the bait and magnifiy the post. Hit message list and see what I mean if you go back several hundred posts. Take care my investing friends.
I have probably said it before, but trying to determine what are the RIGHT standards to measure this company against are impossible - this comapany is very unique because of the divisions. Matters are going to get more confusing with a bacon processing operation.
The marine division has little to do with of the fleet of crude tankers, but after the Wall Street Journal today came out with a negative report about Frontline (FRO), Seaboard has taken a dive. Cause and effect? don't know.
You are right about the large long term debt. Going back through the latest 10Q, I found something interesting. On page 4 & 5, Note 3- Income taxes. Regarding the repatriation of Income:
"The Act would also allow Seaboard a one-time election to repatriate
permanently invested foreign earnings at a 5.25% effective U.S. income
tax rate rather than the statutory 35% rate, if certain domestic
reinvestment requirements are met. Management is currently evaluating
this provision of the Act and expects to complete its evaluation by
the *fourth quarter of 2005*."
Good grief, there are millions of dollars sitting out there and SEB is not moving any faster to get the money back here to pay off debt?
I keep thinking of SEB is like Bershire Hathaway without much cash, but maybe the cash is there....
I agree with you that shareholder equity is improving. The company has 1,225,054 shares outstanding. It would not hurt my feelings if they would take advantage of the high share price and would issue a few more shares to pay off the long term debt.