Author Topic: DWDP - Dow DuPont  (Read 5714 times)

klarmaniac

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DWDP - Dow DuPont
« on: September 11, 2015, 12:38:07 PM »
Sorry if there's already a board for DOW, I searched but didn't see one. I'm interested in both overall opinions on DOW and specific opinions on the upcoming exchange offer:
http://www.dow.com/news/press-releases/dow%20initiates%20exchange%20offer%20for%20chlorine%20value%20chain%20businesses
Thanks :)


John Hjorth

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ugadawg_98

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Re: DWDP - Dow DuPont
« Reply #2 on: July 08, 2018, 02:28:37 PM »
Anyone involved here in this slow-motion breakup play? Iíve been opportunistically adding in the high 50s to low 60s over the past 18 months.

Thoughts?
« Last Edit: July 08, 2018, 11:36:26 PM by Parsad »

cameronfen

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Re: DWDP - Dow DuPont
« Reply #3 on: July 08, 2018, 06:03:30 PM »
Anyone involved here in this slow-motion breakup play? Iíve been opportunistically adding in the high 50s to low 60s over the past 18 months.

Thoughts?

Didn't look closely but the agriculture division goes from 4 players controlling 95% of the corn, soybeans and cotton traits in the US, to two players after this merger and the Monsanto Bayer merger. 

wisowis

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Re: DWDP - Dow DuPont
« Reply #4 on: July 08, 2018, 07:54:06 PM »
I have some $90 Jan 2020 call options.

Here is the napkin thesis from the Third Point Q1 2018 letter:

Quote
DWDP continues to be one of the fundís largest positions. We remain confident in the
underlying business fundamentals and CEO Ed Breenís plan to create value. Despite a series
of positive developments following the mergerís close last August, the discount to intrinsic
value has widened. Several prominent sell‐side analysts have noted the similarities between
DWDPís three future spins (Materials Co, Specialty Co, and Ag Co) and three publicly traded
peers: LyondellBasell, 3M, and Monsanto. Consensus 2020 EBITDA for DWDP is $23 billion
Ė coincidentally the sum of 2020 estimates for LYB, MMM and MON is nearly identical at
$22.5 billion. However, the combined enterprise value for these three companies is $234
billion, about 40% higher than DWDPís current enterprise value of $167 billion. Simply
applying a similar EV to DWDP (which we believe is justified) implies a stock price of $92,
nearly 50% higher than current levels. We expect this value gap to close over the next 12
months as synergies are realized and the three spin‐offs are finalized.

peterHK

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Re: DWDP - Dow DuPont
« Reply #5 on: July 09, 2018, 07:57:37 AM »
They're cheap, and Breen has a lot of levers he can pull to increase value. They're waiting on share buybacks for the rating agencies to inform them as to how much cash needs to be at the spinco's to maintain investment grade ratings.

I like the Dec 2020 $70 LEAP's hear as options tend to misprice these sort of spin scenarios.

BG2008

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Re: DWDP - Dow DuPont
« Reply #6 on: July 09, 2018, 08:54:01 AM »
I have some $90 Jan 2020 call options.

Here is the napkin thesis from the Third Point Q1 2018 letter:

Quote
DWDP continues to be one of the fundís largest positions. We remain confident in the
underlying business fundamentals and CEO Ed Breenís plan to create value. Despite a series
of positive developments following the mergerís close last August, the discount to intrinsic
value has widened. Several prominent sell‐side analysts have noted the similarities between
DWDPís three future spins (Materials Co, Specialty Co, and Ag Co) and three publicly traded
peers: LyondellBasell, 3M, and Monsanto. Consensus 2020 EBITDA for DWDP is $23 billion
Ė coincidentally the sum of 2020 estimates for LYB, MMM and MON is nearly identical at
$22.5 billion. However, the combined enterprise value for these three companies is $234
billion, about 40% higher than DWDPís current enterprise value of $167 billion. Simply
applying a similar EV to DWDP (which we believe is justified) implies a stock price of $92,
nearly 50% higher than current levels. We expect this value gap to close over the next 12
months as synergies are realized and the three spin‐offs are finalized.

Isn't the $90 a bit too out of the money.  I get it that you're only paying like $1-2 for that call.  Wouldn't the ATM Jan 2020 call be more interesting (granted, less upside in terms of ROIC)?  When you get to $90, you've made 250%. 

gokou3

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Re: DWDP - Dow DuPont
« Reply #7 on: July 09, 2018, 11:15:56 AM »
I have some $90 Jan 2020 call options.

Here is the napkin thesis from the Third Point Q1 2018 letter:

Quote
DWDP continues to be one of the fundís largest positions. We remain confident in the
underlying business fundamentals and CEO Ed Breenís plan to create value. Despite a series
of positive developments following the mergerís close last August, the discount to intrinsic
value has widened. Several prominent sell‐side analysts have noted the similarities between
DWDPís three future spins (Materials Co, Specialty Co, and Ag Co) and three publicly traded
peers: LyondellBasell, 3M, and Monsanto. Consensus 2020 EBITDA for DWDP is $23 billion
Ė coincidentally the sum of 2020 estimates for LYB, MMM and MON is nearly identical at
$22.5 billion. However, the combined enterprise value for these three companies is $234
billion, about 40% higher than DWDPís current enterprise value of $167 billion. Simply
applying a similar EV to DWDP (which we believe is justified) implies a stock price of $92,
nearly 50% higher than current levels. We expect this value gap to close over the next 12
months as synergies are realized and the three spin‐offs are finalized.

I have just taken a 2-minute look but how is EV = $167B?  The market cap is close to that number plus there's another ~$60B of ST+LT debt (per Yahoo Finance).

peterHK

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Re: DWDP - Dow DuPont
« Reply #8 on: July 09, 2018, 12:10:01 PM »
I have some $90 Jan 2020 call options.

Here is the napkin thesis from the Third Point Q1 2018 letter:

Quote
DWDP continues to be one of the fundís largest positions. We remain confident in the
underlying business fundamentals and CEO Ed Breenís plan to create value. Despite a series
of positive developments following the mergerís close last August, the discount to intrinsic
value has widened. Several prominent sell‐side analysts have noted the similarities between
DWDPís three future spins (Materials Co, Specialty Co, and Ag Co) and three publicly traded
peers: LyondellBasell, 3M, and Monsanto. Consensus 2020 EBITDA for DWDP is $23 billion
Ė coincidentally the sum of 2020 estimates for LYB, MMM and MON is nearly identical at
$22.5 billion. However, the combined enterprise value for these three companies is $234
billion, about 40% higher than DWDPís current enterprise value of $167 billion. Simply
applying a similar EV to DWDP (which we believe is justified) implies a stock price of $92,
nearly 50% higher than current levels. We expect this value gap to close over the next 12
months as synergies are realized and the three spin‐offs are finalized.

I have just taken a 2-minute look but how is EV = $167B?  The market cap is close to that number plus there's another ~$60B of ST+LT debt (per Yahoo Finance).

This was probably written in March when shares were at ~$61.

They have $34bn in debt, $10bn in cash, and ~$18bn in pension liabilities, so net that's only ~$42bn in debt, and they're generating a lot of cash so that will shrink quickly. 

ugadawg_98

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Re: DWDP - Dow DuPont
« Reply #9 on: July 27, 2018, 08:56:23 AM »
Starting to move up. I had started accumulating in high $50s and stopped around $65. Got nice-sized position, but wanted more.

Catalysts and positive news flow should be coming, but canít make myself pay up.