Opinions
Cameron Hurst
DowDuPont Inc.
DWDP-N
COMMENT
Aug 07, 2018
$68.140
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
He likes the sector. This is a very broad-based materials name, with exposure to chemicals, agriculture, and so on. Some parts of their business are working well now, others not so much. For example, its coating business depends on the success of the auto industry, which might be pulling back. That’s normal for a business that is this broad. In general, materials is a late-stage performer and he has invested in a basket of stocks in this sector. DowDuPont recently reported a good quarter. However, the company’s future plans concern him. The company merged in order to reorganize and align its businesses and then split into three separate companies. He has never seen this intentional process of building to a 3-way split before. This is a multi-year strategy that is working very well so far. It has good global exposure. So he is comfortable with it, but he prefers to go to a broader basket of companies in this late stage rather than buying one and suffering the idiosyncratic risk. But if you were going to pick just one company, this one is broad and could make sense. (Analysts’ price target is $80.78)