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The plan was to lay out my entire macro argument for my thesis, then trickle out the shortlists and final candidates of the thesis, but the recent extreme market volatilty has set me off schedule. Since this particular stock has seen some aggressive price movement, I am releasing this report now for paid subscribers. Be aware that this has not even receieved a final proofing, but a few grammar erros won't hurt anybody since time may be of the essence.

The following is an excerpt from the summary:

... the largest pork processor in the US, is expected to face tough times in the near-to-medium term in the wake of compressing margins and expected slowdown in pork export demand. With internal hog production constituting only 41% of the total domestic live hog requirements of the company's pork segment, the expected surge in hog prices will dent the company's pork segment's operating margins over the next two years. Further exacerbating the margin decline for the pork segment is the increasing proportion of fresh pork, which generates lower margins than the processed pork products, in the company's product mix. While the company's hog production segment otherwise provides a natural hedge to the company's pork segment in the times of rising live hog prices, the negative margins in the hog production segment expected  to continue over the next few quaters owing to rising feeding costs would perceptibly mitigate the benefit of this natural hedge. With the pork segment constituting the largest proportion of the company's revenues (~86% over last two years), we expect Smithfield's overall margins to face downward pressure dragging down the company's valuation. The negative outlook on the company is further strengthened by the fact the chairman of the company's board of directors and its largest shareholder, Joseph W. Luter III, has sold substantial portion of his holdings in the company stock over the past months, indicating the negative sentiments surrounding the company's future prospects, particularly in the near-to-medium term. Using a combination of relative valuation and discounted cash flow (DCF) valuation approaches, we estimate Smithfield's stock at a value of...

This report and subject matter is a prime example of the differece between the retail subscription and the professional/institutional subscriptions. There is a wealth of information, graphics and background industry research, complete with assumptions and full pro formas in the latter that fill in the gaps left in the valuation and business argument of the former. Both are priced extremely competitively, in my opinion, but then again I am a bit biased, aren't I...

Retail subscribers download here - icon SFD_Retail Report_Final_240908 (185.94 kB 2008-09-25 01:38:21)

Professional/institutional subscribers download here - icon SFD_Pro Report_Final_240908 (286.98 kB 2008-09-25 01:32:23)