- No dividend increase announced in 2012: Even though ADM can maintain its long dividend growth streak by announcing an increase during 2013, I was disappointed by this (lack of) news. Every other company in my portfolio increased its dividend in 2012.
- Earnings volatility: It was not until last year's drought that I recognized just how volatile the company's earnings could be and how susceptible they were to external factors. I want the companies in my portfolio to have better earnings stability.
- Occasional negative free cash flows: I did not notice until after I bought ADM that its free cash flow is also volatile, being negative in four of the last ten years. I want my companies to have consistently positive free cash flows. It was a failure of due diligence that I did not examine this point prior to my investment in ADM.
- Questionable acquisition attempt: Despite the recent weakness in its financial position, ADM is attempting to acquire Australian-based GrainCorp for nearly $3 billion. Even though such an acquisition might ultimately benefit ADM, I question whether it is a prudent action at this time.
- Better investment opportunities: I think I can put the capital I had invested in ADM toward a better opportunity, perhaps one with a higher dividend yield than the 2.4% I was getting from ADM.
Friday, January 4, 2013
Stock Sold: ADM
Today I sold all my shares of Archer Daniels Midland (ADM). In a previous post I discussed my conditions for selling a stock and back in November I expressed some concerns about ADM. Here are the reasons why I sold: