Opinions
Lorne Steinberg
DowDuPont Inc.
DWDP-N
TOP PICK
Oct 23, 2017
$71.550
Stock price when the opinion was issued
chemicals
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COMMENT
Spin offs? The agra-chemicals business that will be spun off is not a holding he would buy into. There is uncertainty over genetic modification in the agricultural space, but he bought this in the past for the chemical side of the business. Dupont will target the chemical side and is expected to pay a 5% dividend yield.
chemicals
HOLD
It split into three shares. DWDP-N was a holding company and he would continue to hold it. The AG company would be more challenged.
chemicals
DON'T BUY
When they split up the company, they bundled parts of the company he likes with parts he doesn't. Specifically, he doesn't want to be involved in the agricultural parts. The plastics part claims to be capturing content in automotive--but cars are a shrinking industry. If there are further splits, he'll take another look.
chemicals
The merger between Dow and DuPont offers real cost synergies. Eventually this will be broken up into 3 companies, a specialty and agricultural company’s couples company and a materials company. When we get our breakup value of the stock and take out the cost synergies, he gets a valuation that the stock should be double where it is in the next 5 years. A very, very undervalued company. They are #1 in most of their major businesses. Plenty of free cash flow and lots of room for dividend increases in all 3 of the businesses. (Analysts’ price target is $79.)