Monsanto Pleases Investors. Can Board take Responsibility? $MON

Applause for Monsanto (NYSE:MON) great numbers. Stock trading very close to 52 week high. Fwd PE of around 20 and a dividend yield of 1.3%. Stock has been on a steady climb for past six months in anticipation of todays type of results. Buy on rumor sell on news. Look at the board and see what responsibility they can take for the results. The company has been digging their way out of a few problems.

Average of directors is 61. Average tenure is 8 years. Which means Monsanto gets you on the board early. They currently have two people under the age of 50 and only one over the age of 70. Two women so the odds for the next few directors should tilt female. Lets look at the line up:

William Parfet 66 Chair, CEO and President of MPI Research a pre-clinical toxicology research lab. The guy is a scientist and should understand the complex formulae. But what does he add to commercialization. corporate bio does not delve into the matter.

Robert Stevens 61 Former Chair & CEO of Lockheed Martin. An arms merchant; and probably a very good one. Understands government and geo-politics which is probably closely aligned to food supply, malnutrition and discontent among the masses.

Steven Mcmillan 66. Chair of Sara Lee. Little bit busy with his own agenda. Bit down stream from Monsanto’s position in the food supply. He has the carbs and sugars to deal with. But globally gets the concerns.

Gwendolyn King 72 Senior statesman of the board. Founding partner of Directors Council a corporate board search firm. A former commissionaire of the social security administration and OMG look at this he has been on the board of Lockheed Martin. Probably the next guy to get changed out.

George Poste 68 CEO Health Technology Networks. Big background in Genomics Technology and Computing in Healthcare. Clearly the science guy in a science company. Age should not be a factor.

Arthur Harper 56 Managing Partner GenNx360 Capital Partners a PE firm focused on B2B. Formerly from the General Electric gene pool where he was the President and CEO Equipment Services.

Janice Fields 57 President McDonald’s USA. Career Hamburger fast food person. Women under 60 seems to be doing the right things.

Laura Ipsen 48 Has a lot of experience in public sector and regulatory affairs with Microsoft and previously Cisco. Another young women who is on the move. Maybe even a future CEO of Monsanto is the stars line up correctly.

David Chicoine 65. An academic and economist. This one should go soon.

Jon Moeller 48. CFO of Proctor & Gamble. A career P&G guy but probably from the finance side so he has transferable skills.  Again a young guy that Monsanto is bringing along.

George Gutowski writes from a caveat emptor persepctive.

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Monsanto Not Impressing Everyone. $MON $DD $SYT

black swan (Photo credit: Heiaken)

Monsanto (NYSE:MON) just released impressive earnings. the share price has been on quite a tear for the past six months. I have called for an increased dividend to confirm managements belief of a strong future.

Now listen to the folks a FT “Lex” team. They have a few questions. The Lex Team has raised concerns about Monsanto’s premium valuation (relative to DuPont and Syngenta). The concerns arise from material legal disputes with customers in Brazil, stagnant R&D spending and M&A activity.

I have been known to admire a few Black Swans and this time the gaggle seems to read FT. This is an excellent example of long tail risk which can just change the game over night and supposedly surprise everyone.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti or follow his evil twin brother who is writing a Wall Street Murder thriller at twitter@georgegutowski

Monsanto Nails it. Dividend Increase Maybe. Management Needs to Confirm Earnings $MON

Monsanto (Photo credit: arbyreed)

Monsanto (NYSE:MON) came out charging with an unexpected blockbuster quarter. US farmers flush with last years crop failure insurance money have bought premium seeds and setting themselves up for success this summer.

Pity the investor who did not buy this stock in Aug when it was around $70. You would look very astute with the current $98 per share. So here are the issues. Dividend yield at about 1.5%. If earnings are truly up then management needs to confirm with a dividend increase.

Money flow is mildly negative at 0.92. Short interest has recently risen by 7% but is still only a snick over the 1% of public float mark. Shorts have to be covered. Increasing the dividend makes short positions more expensive. Managements usually hate short positions.

So we need a dividen hike or the market starts to belive management does not believe their own words. In that case the shorts take over.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti or his evil twin who is writing a Wall Street Murder Thriller twitter@georgegutowski .

Monsanto Make Me Believe Increase Dividends $MON

Flowers from a garden in Monsanto, Portugal (Photo credit: Wikipedia)

Monsanto Company (NYSE:MON) recently announced encouraging financial news. Improved profitability, improved cash flow and improved cash position all stacking up quite nicely. OK so now what. If management wants to maximize shareholder wealth and keep the long-term buy and hold investor interested they’ll need to boast the dividend and engage the market with promises of a certain payout. Currently they are offering a 1.56% dividend yield. Not exactly attracting the yield hounds is it? A major competitor Dupont (NYSE:DD) has roughly the same market cap with a 3.19% market yield. Looking further Syngenta (NYSE:SYT) with a slightly smaller market cap offers a 2.3% dividend yield.

Monsanto is unlikely to engage in serious financial engineering and repurchase very large quantities of its stock so as to back into a growing EBITDA. So the next logical financial move for Monsanto is to seriously increase its dividend in the very near future. Despite the nice earnings surprise analyst consensus has not shifted wildly. The official lists of institutional shareholders have the usual listing of index fund but a notable lack of yield and or dividend investors is prevalent.

When comparing Monsanto’s shareholder base you’ll note a real decrease in holdings by large value funds. Note the behaviour one would expect from an improving story. Check out Dupont in the very same category and you’ll find growth in this category. Large value investors are more attracted to DuPont than Monsanto. If management decides to walk the dividend walk they will have to transition their MD&A to a more robust level. Currently they present like a marketing company talking about margins and market segments on a macro-economic level.

If Monsanto cannot transition to a dividend yield senior the company will stay as an ag driven cyclical dependent on the weather and crop commodities futures.

George Gutowski writes from a caveat emptor perspective.

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Monsanto tickle talks the market at its 52 week high. $MON

Image via Wikipedia

Monsanto (NYSE:MON) released results and wants the investing world to know its seed business is just great. I mean really great. For those of you who do not know seeds are purchased early in the ag commodity cycle because the stuff has to be planted and then grow. Last year North America was very wet which affected crop planting. This year with very little snow the prediction is for unwet. Abnormally dry if you prefer the more pedestrian manner of speaking.

Monsanto choses to highlight high sales in Latin America as significant. They do tell you that the Latinos are going big on corn this time around. But they did not provide any statistical info in the earnings release. So we cannot tell how the geographic and geopolitical mix is changing. Important point when you realize that food and agriculture is a global commodity basket.

They do let you in on the important point that US sales are strong and well ahead of this point last year. Just saying.

Seed sales are driven by commodity cycles and price expectations. Monsanto numbers are scrutinized closely. So its interesting to read this snippet attributable to Hugh Grant, chairman, president and chief executive officer for Monsanto. “We are pleased growers have recognized the value of our products and the benefits they provide on farm. Our pipeline progress continues to be a competitive differentiator, and that’s ever more important as we put an even greater focus on delivering yield to growers.”

Sure they have a huge R&D focus. Environmentalists are constantly attacking them for being scientifically successful. But Hugh Grant wants you to drink his Kool Aide. It’s not the commodity cycle it’s all about Monsanto science. The balance is not there. Science accentuates economics it does not trump it.

George Gutowski writes from a caveat emptor perspective. 

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Monsanto Communications Failure

Monsanto (MON) disappointed investors by guiding to the lower range for Q4. You can tell by the strident nature of the guidance release that management wants to get past this disappointment and focus the market on the future. Given that stock prices are supposedly based on future earnings it’s hard to reconcile Chief Financial Officer Carl Casale’s comments about the future with the stock markets sell off disappointment on today’s numbers. The sell job was not complete. Read this snippet and then look at the price action. “With a solid wrap to the quarter, we’ll turn the page and start a new chapter as our growth focus shifts squarely to our seeds-and-traits business.”  

Carl Casale we have the failure to communicate just before you finalize your year-end numbers.

Disclosure: No position in any stocks mentioned in this post.

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