What Should Bayer And Monsanto Shareholders Think About The $122 Per Share Bid?

Bayer’s $62 billion all-cash offer for Monsanto was publicly disclosed earlier today. My five thoughts on the proposed transaction, in no particular order:

Point #1: Monsanto’s growth has come entirely from buybacks of late.

In 2012, Monsanto made profits of just a hair under $2 billion. In 2016, Monsanto is on pace to make a little bit over $2 billion. Specifically, the change is from $1.997 billion to $2.0250 billion, for a cumulative growth rate of 1.40%. And yet, Monsanto has covered up some of this core business stagnation by taking on enormous sums of debt in recent years to retire shares and boost the earnings per share.

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Sherwin Williams: Long-Term Stock Investment Outlook

I’ve been covering stocks for five years, and there are very few excellent long-term businesses that I have neglected to mention at least once. After noting how Cisco investors need to make peace with a management team that feeds at the trough due to the detriment of shareholders, I want to talk about a company that is very good at keeping compensation reasonable while also delivering exceptional value to shareholders: Sherwin-Williams (SHW).

Even though Sherwin Williams has been raising its dividend for 38 years, and sells paints and automotive coatings that are well known to consumers, you rarely hear it mentioned in discussions of ideal long-term investments. I suspect this is because the starting dividend yield frequently hovers around the 1% mark. A lot of people who get interested in owning large, established firms want to see at least 3% of their investment come right back at them as a share of the profits distributed to them in the first year from their investment.

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Cash-Rich Cisco Stock: Perpetually Misvalued

There are two types of non-beginner mistakes that I try to warn against. The first is that people shouldn’t generate a cash-generating asset simply because it has experienced a change in the business cycle that demanded a dividend cut, particularly if the business deals in commodities (see Conoco’s fall to $31 shortly after its dividend cut compared to the current price of $43 for an example). The other mistake involves ignoring companies with truly superior balance sheets–the Berkshire Hathaways, Googles, Microsofts, Johnson & Johnsons, and Ciscos of the investment world that are much stronger and have the capacity to quickly increase their earnings power in ways that a cursory P/E analysis do not make apparent.

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Nestle Dividend Annual Payment: $2.31 Per Share Today

Regarding Nestle stock, I wonder if I confuse “because of” with “in spite of.” In the past, I’ve written about how Nestle is one of the top businesses in the world, and is an exceptional treat investors because it nearly always trades in close proximity to its fair value range. Some businesses, like Emerson Electric and Cisco and Aflac, are especially reliant on the question “At what price did you buy it?” Others, like Colgate-Palmolive or Berkshire Hathaway or Nestle, are much more responsive to the question “Well, how long have you held it?”

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The Staples-Office Depot Merger Terminated In Face of FTC Objection

“Time is the friend of the wonderful business.” The spirit of that famous sentence should be part of the touchstone inquiry before ever contemplating any type of investment. If you are sure that the asset you purchase will be selling more goods or services ten years from now at higher prices, and thereby earning more profits, you’re already well on the path to investment success. The only remaining impediments to watch out for are (1) overpaying and (2) buying something with an over-leveraged balance sheet.

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