The bull case for SEB Seaboard Corp- A solid, safe value play

(from Yahoo Finance) "Seaboard Corporation operates in the food processing and ocean transportation industries in the United States and internationally. It primarily engages in the production and sale of fresh, frozen, and processed pork products, such as loins, tenderloins, and ribs; and further processed pork products primarily consisting of raw and pre-cooked bacon under the Prairie Fresh and Daily's brand names to further processors, foodservice operators, grocery stores and other retail outlets, and other distributors. The company also markets wheat, corn, soybean meal, and other commodities worldwide; and involves in milling and grain processing activities. In addition, Seaboard Corporation provides containerized cargo shipping service to approximately 25 countries between the United States, the Caribbean Basin, and Central and South America. As of December 31, 2006, its fleet consisted of 10 owned and approximately 29 chartered vessels. Further, the company engages in the production and refining of sugar cane; the production and processing of citrus fruits; and processes jalapeno peppers. The sugar products are primarily sold in Argentina to retailers, soft drink manufacturers, and food manufacturers; and the citrus products are primarily exported to the global market. Additionally, Seaboard Corporation operates as an independent power producer in the Dominican Republic."

so..... it's:

• boring
• small to mid-cap
• diversified
• global
• a century old
• family owned (3 generations!) with huge insider ownership 72%
• thinly traded (relatively) and low profile
  

Value assessment of SEB's financial profile:

• P/E 8 (near 5 year lows) *note* B. Grahams' value equation P/E x P/B<22 value =" 11.8
• P/B 1.36 (ditto)
  
• P/S 0.62 lowest of comps (strongest variable on future stock price appreciation as per Fisher)
• EPS 1 year growth 85% 10 year growth 1057% yet share price down 51% from 52 week high
• P/FCF 6.2 (lowest of comps)
• Enterprise value/revenue 0.56 (very low and that's good)
  
• minimal debt Current ratio 2.86 Quick Ratio 1.6 LT debt<< total assets
  
• Quantitative evidence of good management 5 year ROE17 ROA 9.4 ROC 14.4 all at least 50% higher than comps
• Qualitative evidence of good management-- last conference call CEO warned that stock was at a short term spike in a long term uptrend (and he was right, of course).
• Guru Irving Kahn bought $30 M worth of stock (he recently added 40% to position in Sept 2007 when share price was > $2000-- it currently trades at $1440/share)

There is a general consensus that agribusinesses have an excellent long term potential for growth world wise, particularly as the evolving south and east Asian middle class demands better quality of food. It should also be noted that Chinese demand for pork and seafood is much higher than other areas of the world and appears to be growing. SEB is well positioned for further EPS growth.

Despite the high share price, the fundamentals suggest that this stock is cheap and has an acceptable margin of safety due to easily manageable debt and excellent cash flows as well as an established very long term track record and a very large insider stake. It will definitely be a good long-term stock to study. I plan to start a position at $1400 for a few shares.