DuPont de Nemours Inc. (DD)

A private equity group is trying to divide the company between the old slow growth chemical company and the new high tech agricultural company. The company has stated that they are interested in the creation of shareholder wealth. This is a good situation. They are not trading in an expensive way. He’ll continue to own and let the activists’ stuff work itself out.

He owns this for the agriculture slant through their seed business. That business is a little lumpy and a little tough at the moment, but it has long-term potential. A very well-managed company. Much of the business now comes from industrial biosciences, and more high-tech, rather than the high-tech industrial chemical. This is a good place to be, and you are somewhat hedged regarding agriculture.

We have gone from a market between 2000 and 2012 that was for price setters. Producers of products that were in short supply were able to set prices. Price takers, that had to pay those higher prices were under pressure. Feels we have gone through a watershed over the last few years, where the price takers are doing much better because commodity producers are having a hard time setting price. Anybody buying commodities now are benefiting from the weakness in commodity prices. The chemical industry has been a huge beneficiary of the boom in oil/gas production in the US. He likes chemical industries as a whole. This is a great company in that they have been shedding the commodity chemical business and focusing on specialty chemicals, which are higher margins.

(Market Call Minute.) Slightly disappointing numbers on the agriculture seed side of their business. They are really a new technology type of seed company.

They have really transitioned from being pure chemical. Sold coating business last year. The titanium dioxide business is going to be spun out. They are becoming a different kind of company that is growing earnings quite well. A good solid hold. An activist activity has helped them, too.

DuPont (DD-N) and Dow are trying to shed non-core assets, which are mostly the plastic businesses. They generate a ton of cash flow. Earnings have been good and the stocks have been rising in this rally because this latest rally has been on the back of industrials and the big commodity companies. This company will continue to do what it is supposed to do as long as the economy continues going forward. The cold winter slowed down their earnings which should start to improve in the back end of the year. Stock has been growing about 20%-25% a year. Still likes.

(Top Pick Feb 20/14, Up 4.32%) Such a successful trade for 24 years in the spring. May 5 until end of year this one does not perform well so he got out. It averages a loss of 3% during this period.

From now into the beginning of May it has been up 96% of the time. Company is well run. Sold off performance coatings business. People are excited about this company.

Dow Chemical (DOW-N) or Dupont (DD-N) for a 2-3 year hold? He prefers this one. It is a business he has always liked. Good management. Likes the agricultural side of their business. Have a lot of exposure to emerging markets. As China’s housing market slows down, there will be a bit of a ripple.

A broadly diversified company. In the midst of splitting up and selling their chemical business off. Great balance sheet and a very attractive dividend but organic growth is weak. The key business that has been growing is their agribusiness but that is a distant number #2 from companies like Monsanto. Would prefer something like 3M (MMM-N).

Probably his all-time favourite stock. Essentially it is an applied technology wonder. They are refocusing the company to 3 areas, high-grade materials, biodiversity and agriculture. Spinning off things that they feel have limited potential from here. This is a company that innovates. He would be a buyer at slightly below current levels.

(A top pick Jan 30/13. Up 36.5%.) Bought this when earnings were depressed for a couple of quarters. Great company that is involved in several different businesses. A hedge fund recently got involved pushing them to spinoff its chemicals business.

(A Top Pick Nov 21/12. Up 47.96%.) Sold their coating business. It is more of a capital allocation situation for them. They used the money to increase their dividend and increased buybacks. Thinks the selling of their performance chemicals business will be a catalyst for the stock to go higher.

Sold his holdings a long time ago and regrets it. One of his favourite names in the chemicals/materials space in the US. Exceptionally well managed. Very consistent in talking to the street and their expectations of 5%-7% of organic growth. They are going to sell off some of their assets, specifically the titanium dioxide business. Wait for this to consolidate a little bit.

Is moving quickly away from being a traditional chemical company and a third comes out of agriculture and science, nutrition and health. Report tomorrow. Interested in that they want to sell their titanium dioxide division.