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Seaboard Corporation (SEB)

NYSE American - NYSE American Delayed Price. Currency in USD
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2,834.00+0.62 (+0.02%)
At close: 4:00PM EDT
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  • w
    wbart21
    *There's our $3200 target trigger. Staying above $2900 area on closing basis will move us to the key $3200 area. Large double bottom on weekly chart with juicy upside targets if/when that supply in $3200-$3300 is cleared.
  • C
    CT
    Price jump +4% over yesterday.
    Possible share buyback?
    News?

    Would the family look to cash in by selling the firm?
  • T
    Tom
    Despite a horrible quarter, where management failed to take advantage of incredibly low share prices, I find myself coming back to $SEB for the same reasons I invested in the first place. You could say management was conservative by not spending big on repurchases and instead using the money to repay debt, fine, maybe so, but it was dumb and they still have a chance to figure it out now, despite having little incentive.

    About two months ago I predicted roughly $120M of income from investment activities for this quarter and it came in at around $113M which means the portfolio is being well managed on the equity side. As an investor in $SEB, the cash and securities on the balance sheet represent a large portion of the equity. Prudent management of $SEB's investment portfolio reminds me of a Berkshire Hathaway type opportunity where the operating cash is sufficient to supply ample cash for new and existing positions. The problem is the free cash flow isn't there and hasn't been lately.

    The company is spending a lot of money on PPE with $108M invested during the second quarter with $75M going to Guymon, $19M going to the barge situation in the Dominican amongst other things. They've got another $128M budgeted for 2020 at Guymon and $174M in total.

    I do think the stock is inexpensive, but the high CAPEX and operating losses in Marine, Sugar, Alcohol, Power and Turkey is brutal. It's like, why are we running businesses with such high volatility and low margins? Pork and Commodities were OK with commodities being stronger in my opinion. Commodities actually wasn't bad if not for the way it is reported under GAAP with derivatives being marked-to-market, skewing operating income downward based on current prices. Thing is, futures and forwards generally are longer term in this type of business, suppliers are trading on daily basis on some of the hedging they do - it's just not reported that way.

    Right now, today, I do not own any $SEB shares. I'm considering re-opening a position but I don't have enough conviction about the actual free cash that this company can produce. I think fair value is in the mid $4000's but it there are so many premiums and discounting mechanisms attached to this stock that it doesn't get the same valuation as companies that carry less risk (think liquidity, voting power, highly capital intensive, etc.)

    I need to think about more - it's very difficult for me to justify this versus the rest of my equity portfolio which is concentrated on just a few names with similar characteristics in terms of governance.
  • l
    lamle
    I heard about SEB the other day on http://stocktip.xyz. It’s looking like an interesting play.
  • T
    Tom
    $SEB < $2700 unbelievable value
  • G
    GOAT
    You know if they created an app then did a stock split share price would climb 30% and they could raise equity there
  • T
    Tom
    Some nice volume the last week Bart & Bemo if you’re out there. It will interesting to see if Steer can sway investors to believe that the company will be more shareholder friendly.
  • w
    wbart21
    Getting close to my $2660 - $2735 closing T area. Quite a discount to BV. Should find out in coming days whether BV has been eroded during Q2 to the extent pps suggests
  • C
    CT
    https://www.seaboardcorp.com/investors/

    2Q loss of ($88.53)/share vs 1Q loss of ($22.35)/share
    Capital market volatility on short-term investments has an impact on Seaboard’s earnings. For the three and six months ended June 27, 2020, net loss attributable to Seaboard Corporation included other investment income (loss) of $128 million and $(97) million, respectively. For the three and six months ended June 29, 2019, net earnings attributable to Seaboard Corporation included other investment income of $37 million and $150 million, respectively. Non-cash unrealized marked-to-market gains (losses) on short-term investments was $113 million and $(97) million for the three and six months ended June 27, 2020, respectively.

    What ST Investments does SEB have?
    Investor Center – Seaboard
    www.seaboardcorp.com
  • w
    wbart21
    Prayers& condolences to Bresky family. Tom, you are more familiar with bench depth here. Is Steer the logical & your preferred choice? Given fact that 3 generations of Breskys have led this company for past 100 years or so, are there changes you'd like to see instituted under new leadership?
  • C
    CT
    Seaboard Corporation Press Release

    5:50 pm ET July 20, 2020 (PR Newswire) Print
    Seaboard Corporation (NYSE AMERICAN: SEB) today announced that its Board of Directors has appointed Ellen S. Bresky as a director and Chairperson of the Board, filling the vacancy previously held by her late husband, Steven J. Bresky. In connection with this appointment, the Board also appointed Douglas W. Baena, who is currently an independent director and Chairman of Audit Committee, to be Lead Director, with responsibility to act as liaison between the Board and Company management.

    Seaboard also announced that the Board elected Robert L. Steer, the Company's current Executive Vice President and Chief Financial Officer ("CFO"), to the office of President and Chief Executive Officer, effective immediately, to succeed Mr. Bresky. Mr. Steer has served as Executive Vice President and CFO of the Company since April 2011, and he has been with the Company for more than 35 years serving in various capacities. Mr. Steer will also continue to serve as CFO until a successor CFO is identified and appointed.

    Seaboard also announced that the Board elected Jacob (Jack) A. Bresky, son of Steve and Ellen Bresky, to the office of Vice President-Business Development. Jack has been with Seaboard more than seven years.

    Ms. Bresky and Mr. Baena stated: "We are confident that these appointments will provide continuity for Seaboard's businesses and will enable Seaboard to continue the legacy of the late Mr. Bresky, Seaboard's former President/CEO."
  • T
    Tom
    If you take a look at some of the statistics with regard valuation, using a simple arithmetic mean over a 5 year period produce the following;

    Price / Sales = .75
    Enterprise Value / Revenue = .64
    Price / Book = 1.39
    Enterprise Value / EBITDA = 10.95

    Currently, this is what we have.

    Price / Sales = .49
    Enterprise Value / Revenue = .54
    Price / Book Value = .98
    Enterprise Value / EBITDA = 17.22

    I wanted to provide some useful information for investors thinking about dumping $SEB. Right now, Seaboard trades at an ~35% discount on price / sales, a ~16% discount on enterprise / revenue, a ~30% discount on price / book, and a ~57% premium on enterprise value / EBITDA.

    You can't use these numbers by themselves to reach any accurate conclusions, but when you look at the big picture and consider how much $SEB has grown enterprise value, assets and equity over the last decade, it's clear that this company is trading at discount. For example, while it appears $SEB is expensive on an EV basis (market cap + preferred + debt - cash), it's really not when assets have swelled from $2.3B to $6.4B and sales have increased from $3.6B to $7B.

    It's not all great with Seaboard, they have plenty of issues regarding margins, sustaining capital and other areas, but they have very high quality, tangible assets. The company is cheap. I think it's worth between $4644 and $5160
    Less
  • w
    wbart21
    Tom, any insight into Q2 release timing? FIDO tells me Wed., but am wondering if recent C-suite transition might Cx some delay. Imagine Steer is exceptionally busy.
  • T
    Tom
    Seaboard released Q1 2020 earnings last night.  Here’s an update and my views on how it went.  
     
    Q1 revenues increased 9% to $1.68B up from $1.54B in 2019   < very impressive given COVID
     
    Net income was -$88.43 per share compared to $43.47 in 2019.  The decline in net income is related to $236M in mark to market losses on investments.  Mark to market losses are unrealized and are only because the underlying value of the investments has gone down.  Since the -$236M in losses is a non-cash, unrealized item, I don’t assign that much weight to it. 
     
    Last year their portfolio contained $1.4B in securities now it is closer to $1.1B.  Think about how much the market has recovered since March – they’ll get that money back.  Lean hog futures m alone are up 50% since March and both wheat and soybeans have been steady. 
     
    Cash and cash equivalents on hand was $1.2B down from $1.6B in Q1 2019.  They have enough cash on hand to cover expenses for almost 3 years and I like that about them. 
     
    They bought back 4069 shares at the following prices
     
    130      January 2020               $3,944
    820      February 2020             $3,886
    3119    March  2020                $3,035
     
    As you can see, they spent a lot of money buying shares at $3035.  I think that is demonstrative of that fact that they see the stock trading at .5 price/sales and .98 price/book value. 
     
    As I’ve mentioned, I like companies that retain earnings and buy back their own shares because it increases equity.  In this case, there are only 249,000 total shares available for trading.  So buying 4,000 is 1.7% of total shares that can be purchased (float). This is part of the reason the share price is so high.  Management cares about the stock price because they own 910,600 shares or 78% of the company. 
     
    To wrap up, this company did exactly what I was hoping they would, remain fairly insulated from COVID and continue to grow cash flows.  They increased both sales and profit margins in pork and commodity trading, their two largest segments.  Commodity trading revenue was up to $914M for Q1 an increase of $85M (+10.25%) over 2019.  Pork came in at $455M up from $403M in 2019 (+12.9%).  These two segments combine for 78% of revenue so they are by far the most important.
     
    Smaller segments like seaboard marine , turkey, power generation were also strong.  Seaboard Marine for example had sales of $270M up from $254M in 2019.  They were saying that shipping EBITDA has been down due to higher costs on containers,leasing and fuel.  They are going to save a lot of money on fuel in that business and across the enterprise in the next few quarters so I’m hopeful they can squeeze some cash out of that segment.
     
    Bottom line, Seaboard continues to grow cash flow and despite headwinds from COVID demonstrating the strength of its vertically integrated and diverse business model.
    Bullish
  • T
    Tom
    I'm looking forward to seeing how much of the ~$65M available for repurchases was utilized in Q2. A 10,000 share repurchase ~$30M for example would make a tangible difference in EPS.

    Say $SEB earned $120M from investing activities and had reasonable operating income from other segments, say $40M. It's just not that unreasonable to assume ~$160M marked to market. In A 10,000 share repurchase scenario, contingent upon a few other factors, that's around $139 EPS.

    I think this company can earn more than $300M this year - or around $258 per share. I think fair value is between $4,644 and $5,160
  • T
    Tom
    To add: At the end of Q1 $SEB had over $600M in equity holdings, $475M in debt along with some other stuff. Think about the ~$236M of unrealized losses during the last quarter in March with the SP near it’s lows, pre-massive fed intervention. I think operating income will be decent but we’re only talking ~12% or so from a $1.1B basis to reach $100 EPS. Pretty easy to see how that number could be huge depending on exactly what is in there. A 20% return alone is $100 EPS notwithstanding the other $575M invested elsewhere.
  • A
    Anthony
    SEB trying to go private?
  • T
    Tom
    If we get another chance at $2450 I’m buying as many shares as I can get
  • T
    Tom
    Looking to re-up on $SEB at $2800. If they can get some cooperation with hog prices and boost income from investing activities, I believe EPS could come in at > $100
  • T
    Tom
    This stock is so ridiculously inexpensive considering essentially all of its assets are tangible. It’s almost a joke that investors aren’t considering how much cash $SEB is could generate from investing activities. I don’t feel that $100+ EPS is unreasonable, that’s only ~$120M. Say shipping and other smaller segments are weak and generate negative cash flows - doesn’t matter when capital gains count as earnings. I think they’ll put up a big number