A Quick New Position Update
An opportunistic addition to the Model Portfolio
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Value Situations is NOT investment advice and the author is not an investment advisor.
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In the last 24 hours, agricultural commodities trader Archer Daniels Midland (ADM) shocked the market with the news that it had placed its CFO Vikram Luthar on administrative leave and delayed its upcoming quarterly earnings release pending an investigation into accounting practices within its nutrition business. ADM didn’t disclose any specific details regarding the potential accounting irregularities, but its stock plunged -24% in reaction to the news, its biggest one-day price drop in 40 years:
Notably, as ADM plunged on this alarmingly negative news, its broader public peer group also declined in apparent sympathy, despite ADM’s issues being very much specific to it and having no bearing on peers such as Wilmar International or Bunge Global, which declined -1.35% and -4.23% respectively:
I believe ADM’s current crisis presents a compelling opportunity, not in ADM stock itself, but with respect to another name that has now become actionable following yesterday’s price action, prompting me to add this name to the Model Portfolio as an opportunistic new position …