Machinery Chatter
Jim Patrico Progressive Farmer Senior Editor

Monday 01/07/13

Tractor Companies By the Numbers

The Street Authority recently carried an article by Dave Goodboy titled: "2 Buys From Bill Gates' Secret Investment." It was about the Microsoft billionaire's holdings in Cascade Investment LLC and that company's secretive investment practices. What caught the eye of my fellow DTN/The Progressive Farmer editor Elaine Shein was this:

(DTN file photo)

"Here's are two of Cascade's latest investments that are great opportunities for profits.

1. Deere & Co. (NYSE: DE) Gates ramped up his holding in the farm and heavy-equipment manufacturer by 3 million shares from Dec. 7 through Dec. 10. This increased his stake in the company from 5.8% to a 7%. Gates' last major increase in Deere shares was in August 2011, when he owned 24.5 million shares."

Elaine passed the clip to me, which got me thinking about farm equipment company stocks in general. I did a little research on stock prices of the Big Three -- John Deere, CNH and AGCO -- and will share some of what I found.

First, I claim to be no expert at analyzing stocks, the stock market or anything that remotely can be considered an investment opportunity. Bill Gates does NOT call me for advice. Don't look for anything insightful here. These are just numbers.

Not surprisingly, these numbers look pretty good for all three the last few years. Deere's stock price started 2010 around $56/share; by the first week of 2013, it was at about $88. CNH started 2010 at around $26; it began 2013 at around $42. AGCO started 2010 at around $33; it began 2013 at around $51.

All three look like pretty good investments for that three-year period. Going back 10 years to January 2002, Deere was at $21, CNH $31 and AGCO $16. Again, all three would have been fine investments over that 10-year period based on what their stock prices are now. Even so, all three had their ups and downs in the 2000s. Between January 2008 and January 2009, for instance, Deere slumped from around $90 per share to around $42 per share. Deere's construction and mining divisions took a hit as the Great Recession bit.

CNH's stock price was likewise damaged during that time period, falling from around $66 in January 2008 to around $18 in January 2009. CNH, like Deere, has a significant construction segment.

AGCO, which is strictly agriculture, was not immune from the recession. During that same time period (2008-2009) its stock price slipped from around $67 to around $25.

For the year of 2013, all three had relatively stable-to-positive price trends. But all three sagged in May and into the summer. Drought worries hitting investors? However, all three climbed as the fall and winter set in. Boosted by crop insurance?

These are just numbers, folks. But they do indicate for the non-agricultural stock buyer, companies that make farm equipment have been pretty solid investments since the 21st century began. That has to be a reflection on the agricultural industry in general.

Posted at 2:46PM CST 01/07/13 by Jim Patrico
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