{"id":9593,"date":"2014-03-08T14:06:16","date_gmt":"2014-03-08T18:06:16","guid":{"rendered":"http:\/\/www.pgm-blog.com\/?p=9593"},"modified":"2014-03-08T14:06:16","modified_gmt":"2014-03-08T18:06:16","slug":"highlights-of-the-week-of-march-3rd-2014","status":"publish","type":"post","link":"https:\/\/www.pgmcapital.com\/nl\/highlights-of-the-week-of-march-3rd-2014\/","title":{"rendered":"Highlights of the week of March 3rd 2014"},"content":{"rendered":"<p><a href=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2014\/03\/Bull.jpeg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone  wp-image-9603\" alt=\"Bull\" src=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2014\/03\/Bull.jpeg\" width=\"302\" height=\"211\" srcset=\"https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2014\/03\/Bull.jpeg 560w, https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2014\/03\/Bull-300x209.jpeg 300w\" sizes=\"auto, (max-width: 302px) 100vw, 302px\" \/><\/a><a href=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2014\/03\/Logo-BRFS.jpeg\"><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-9604 alignright\" alt=\"Logo BRFS\" src=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2014\/03\/Logo-BRFS.jpeg\" width=\"202\" height=\"122\" \/><\/a><\/p>\n<p>Dear\u00a0<strong>PGM Capital\u00a0<\/strong>Blog readers,<\/p>\n<p>In this weekend&#8217;s blog edition, we want to discuss some of the most important events that happened in the global capital markets, the world economy and the world of money in the week of March 3rd, 2014.<\/p>\n<ul>\n<li>Brasil foods income grew with 38 percent in 2013.<\/li>\n<li>Warren Buffett cuts on bond allocation.<\/li>\n<li>Nestl\u00e9 bulls pay record prices for call options, after L&#8217;Oreal stake sale.<\/li>\n<li>India&#8217;s BSE Sensex at all time High.<\/li>\n<\/ul>\n<p style=\"text-align: left;\" align=\"center\"><span style=\"color: #0000ff;\"><strong>BRF SA INCOME GROWS 38% IN 2013:<\/strong><\/span><br \/>\nBrasil Food S.A., (NYSE: BRFS) world&#8217;s largest poultry and a processed-food exporter, reported on Friday, February 28th, 2014, that it\u00a0closed 2013 with net profit of R$ 1.1 billion, 38% higher than in 2012. Adjusted EBITDA totalled R$ 3.6 billion, an increase of 35.3%, with improvement in EBITDA margin, which reached 11.9%, compared to 9.4% \u00a0in 2012.<\/p>\n<div id=\"attachment_9596\" style=\"width: 418px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2014\/03\/brf_img_marcas_PT.jpg\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-9596\" class=\" wp-image-9596 \" alt=\"\" src=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2014\/03\/brf_img_marcas_PT.jpg\" width=\"408\" height=\"227\" srcset=\"https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2014\/03\/brf_img_marcas_PT.jpg 680w, https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2014\/03\/brf_img_marcas_PT-300x167.jpg 300w\" sizes=\"auto, (max-width: 408px) 100vw, 408px\" \/><\/a><p id=\"caption-attachment-9596\" class=\"wp-caption-text\">Brasil Foods Brands<\/p><\/div>\n<p style=\"text-align: left;\" align=\"center\"><strong>Highlights:<\/strong><\/p>\n<ul>\n<li>Net revenue for the year reached R$ 30.5 billion, 7% higher than in 2012<\/li>\n<li>Net revenues on 2013 4th quarter (4Q2013) grew by 0.8% compared to last year\u00b4s same period and reached R$8.2 billions.<\/li>\n<li>Net income reached R$208 millions and Adjusted EBITDA reached R$954 millions, resulting in an adjusted EBITDA margin of 11.6%.<\/li>\n<li>In total the company exported in 2013, 2.5 million tons of processed food, an increase of 1.5% in relation to the previous year<\/li>\n<\/ul>\n<p><a title=\"BRF INCOME GROWS 38% IN 2013\" href=\"http:\/\/www.brasilfoods.com\/ri\/siteri\/web\/conteudo_en.asp?idioma=1&amp;tipo=32201&amp;conta=44&amp;id=99658\" target=\"_blank\">Source:<\/a><\/p>\n<p style=\"text-align: left;\" align=\"center\"><span style=\"color: #0000ff;\"><strong>WARREN BUFFETT CUTS ON BOND ALLOCATION<\/strong><\/span>:<br \/>\nWarren Buffett\u00a0cut the allocation to bonds at\u00a0Berkshire Hathaway Inc.&#8217;s (NYSE: BRK-A)\u2019s insurance units to the lowest in more than a decade as the company warns that low yields will hurt results.<\/p>\n<p style=\"text-align: center;\"><a href=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2014\/03\/Warren-Buffett.jpeg\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-9597 aligncenter\" alt=\"Warren Buffett\" src=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2014\/03\/Warren-Buffett.jpeg\" width=\"224\" height=\"224\" srcset=\"https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2014\/03\/Warren-Buffett.jpeg 224w, https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2014\/03\/Warren-Buffett-150x150.jpeg 150w, https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2014\/03\/Warren-Buffett-73x73.jpeg 73w, https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2014\/03\/Warren-Buffett-174x174.jpeg 174w\" sizes=\"auto, (max-width: 224px) 100vw, 224px\" \/><\/a><\/p>\n<p>Fixed-income assets made up 14 percent of investments at the insurers as of Dec. 31, 2013, according to the company\u2019s annual report. The year-end figure has typically been 20 to 25 percent since 2002, according to Berkshire documents. The US$186.8 billion portfolio included US$114.8 billion\u00a0of stocks.<\/p>\n<p>Buffett has said low yields mean that insurers and other bond investors are holding \u201cwasting assets.\u201d To counter that he struck private deals for higher-paying securities and added equities. Omaha, Nebraska-based Berkshire also made acquisitions and invested in its\u00a0railroad\u00a0and energy utilities.<\/p>\n<p>Buffett has also been favouring shorter-duration bonds. As of Dec. 31, Berkshire had about US$8.5 billion of bonds that were due in a year or less. That compares with US$6 billion\u00a0at the end of 2012. The holdings typically offer lower yields than longer-duration securities while providing more flexibility.<\/p>\n<p><span style=\"color: #0000ff;\"><strong>NESTL\u00c9\u00a0BULLS PAYS RECORD PRICES FOR CALL-OPTIONS AFTER L&#8217;OREAL STAKE SALE:<\/strong><\/span><br \/>\nIn February of this year, Swiss food group Nestle (NESN.VX), the biggest food producing company on earth sold an 8 percent stake in L&#8217;Oreal S.A (OR.PA) to the French cosmetics firm for 6.5 billion euros (US$9 billion), loosening their 40-year partnership and allowing both firms to boost earnings per share.<\/p>\n<p style=\"text-align: center;\"><a href=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2014\/03\/Nestle-L-oreal.jpeg\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-9600 aligncenter\" alt=\"Nestle L oreal\" src=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2014\/03\/Nestle-L-oreal.jpeg\" width=\"286\" height=\"176\" srcset=\"https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2014\/03\/Nestle-L-oreal.jpeg 286w, https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2014\/03\/Nestle-L-oreal-285x176.jpeg 285w\" sizes=\"auto, (max-width: 286px) 100vw, 286px\" \/><\/a><\/p>\n<p id=\"yui_3_9_1_1_1394244488566_2075\">L&#8217;Oreal will pay for the deal with 3.4 billion euros in cash and by selling to Nestle its 50 percent stake in their Galderma dermatology venture for 3.1 billion euros, including about 500 million of debt, which Nestle will pay for in L&#8217;Oreal shares.<\/p>\n<p id=\"yui_3_9_1_1_1394244488566_2084\">One of the highlights of the deal for Nestle was the Swiss group&#8217;s commitment to grow its dermatology business as part of its drive to focus on health, wellness and nutrition.<\/p>\n<p>As a consequence of this the company&#8217;s\u00a0bulls\u00a0Nestl\u00e9 bulls, bid up the prices for the company&#8217;s <a title=\"Call Options\" href=\"http:\/\/www.investopedia.com\/terms\/c\/calloption.asp\" target=\"_blank\"><strong>call-options,<\/strong><\/a> convinced the food company will buy back shares and boost dividends after it sold a portion of its stake in L\u2019Or\u00e9al.<\/p>\n<p>Call prices linked to the company&#8217;s stock has risen 13% since June and have reached a record versus puts on February 26.<\/p>\n<p><strong><span style=\"color: #0000ff;\">INDIA&#8217;S SENSEX INDEX AT ALL TIME HIGH:<\/span><br \/>\n<\/strong>On Friday March 7, 2014, India&#8217;s benchmark S&amp;P BSE Sensex soared to new record high of 21,710.43 in opening trade on heavy foreign capital inflows, tracking positive domestic and global cues.<\/p>\n<p>As can be seen from below chart, the 30-share index, which had gained over 567 points in the previous three sessions, zoomed to 21,710.43 by surging 196.56 points, or 0.91 percent.<\/p>\n<p>The Sensex&#8217;s record high of 21,525.14 surpassed its previous historic milestone of 21,483.74 hit on December 9 last year. India&#8217;s <a title=\"S&amp;P CNX NIFTY\" href=\"http:\/\/en.wikipedia.org\/wiki\/S&amp;P_CNX_Nifty\" target=\"_blank\"><strong>CNX NIFTY<\/strong><\/a> ended only 0.2 percent off its record of 6,415.25 hit on the same date.<\/p>\n<p style=\"text-align: center;\"><a href=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2014\/03\/SensexAll-Time-Chart.png\"><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-9601 aligncenter\" alt=\"SensexAll Time Chart\" src=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2014\/03\/SensexAll-Time-Chart.png\" width=\"560\" height=\"241\" srcset=\"https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2014\/03\/SensexAll-Time-Chart.png 800w, https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2014\/03\/SensexAll-Time-Chart-300x129.png 300w, https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2014\/03\/SensexAll-Time-Chart-768x331.png 768w\" sizes=\"auto, (max-width: 560px) 100vw, 560px\" \/><\/a><\/p>\n<p>The strong rally has defied expectations that foreign investors would grow more cautious as the Federal Reserve continues to withdraw its monetary stimulus and ahead of the general elections set to kick off on April 7.<\/p>\n<p>Instead, overseas investors have bought heavily into India as a sharply narrowing current account deficit and a more stable rupee have increased confidence in a country that only last year was in the midst of its biggest market turmoil since the balance of payments crisis of 1991.<\/p>\n<p style=\"text-align: left;\" align=\"center\"><span style=\"color: #0000ff;\"><strong>PGM CAPITAL COMMENTS:<\/strong><\/span><\/p>\n<p style=\"text-align: left;\" align=\"center\"><strong>Brasil Foods<br \/>\n<\/strong>Based on its fundamentals, strong cash flow and ability to increase its dividend Year Over Year we have a <span style=\"color: #008000;\"><strong>STRONG BUY<\/strong><\/span> rating on the stock of Brasil foods.<\/p>\n<p style=\"text-align: left;\" align=\"center\">As can be seen from below chart the shares of the company have appreciated with over 1,650 percent since it went IPO in October of 2003.<\/p>\n<p style=\"text-align: center;\" align=\"center\"><a href=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2014\/03\/Brasil-foods.png\"><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-9608 aligncenter\" alt=\"Brasil foods\" src=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2014\/03\/Brasil-foods.png\" width=\"472\" height=\"206\" srcset=\"https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2014\/03\/Brasil-foods.png 786w, https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2014\/03\/Brasil-foods-300x131.png 300w, https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2014\/03\/Brasil-foods-768x336.png 768w\" sizes=\"auto, (max-width: 472px) 100vw, 472px\" \/><\/a><\/p>\n<p style=\"text-align: left;\" align=\"center\">It is also worth mentioning that in accordance with the company&#8217;s policy it pays a minimum of 25 percent of its net income as dividend to share holders.<\/p>\n<p style=\"text-align: left;\" align=\"center\">During the last 10 years the company&#8217;s dividend has increased from US$ 0.046 a share in 2004 to US$ 0.179 a share in January of 2014, an increase of approx. 290 percent during the last 10 years.<\/p>\n<p style=\"text-align: left;\" align=\"center\">Below chart shows the dividend payout as a percentage of net income of the company during the last 10 years.<\/p>\n<p style=\"text-align: center;\" align=\"center\"><a href=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2014\/03\/brf_pagamento-acionistas_EN.gif\"><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-9615 aligncenter\" alt=\"brf_pagamento-acionistas_EN\" src=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2014\/03\/brf_pagamento-acionistas_EN.gif\" width=\"416\" height=\"218\" \/><\/a><\/p>\n<p style=\"text-align: left;\" align=\"center\"><strong>Buffett cuts on Bonds:<\/strong><\/p>\n<p style=\"text-align: left;\" align=\"center\">In several of our previous articles we have warned our readers, that with rising interest rates, bonds may become the cyanide pil for investors in 2014.<\/p>\n<p style=\"text-align: left;\" align=\"center\">Due to this we have a <strong><span style=\"color: #ff0000;\">SELL<\/span><\/strong> rating on all bonds and don&#8217;t hold any bond in our own personal portfolio or in those of our clients.<\/p>\n<p style=\"text-align: left;\" align=\"center\"><strong>Nestl\u00e9 and L&#8217;Oreal:<br \/>\n<\/strong>L\u2019Or\u00e9al\u2019s agreement to buy 8% of Nestl\u00e9\u2019s stake in February for \u20ac6 bilion, for which about \u20ac3.4 bilion was paid in cash\u00a0won the support of Nestl\u00e9\u2019s biggest owners in part because it freed money to return to shareholders.<\/p>\n<p style=\"text-align: left;\" align=\"center\"><strong><\/strong>Due to this we believe that\u00a0Nestl\u00e9\u2019s investors, who are currently bidding the company&#8217;s call options, are betting on shares buy-backs and an improved dividend.<\/p>\n<p style=\"text-align: left;\" align=\"center\">The deal will cut Nestl\u00e9&#8217;s holding in L&#8217;Oreal to 23.29 percent from 29.4 percent, while the Bettencourt Meyers family&#8217;s stake in L&#8217;Oreal will rise from 30.6 percent to 33.31 percent. The deal is expected to close in the first half of this year.<\/p>\n<p id=\"yui_3_9_1_1_1394244488566_2112\">Explaining the deal, L&#8217;Oreal&#8217;s, chairman an CEO Jean-Paul Agon said:<\/p>\n<blockquote><p>&#8220;Nestl\u00e9&#8217;s stake reduction had to allow it to remain a strategic shareholder &#8230; while making sure that the Bettencourt family stayed below the 33.33 percent level.&#8221;<\/p><\/blockquote>\n<p>Beyond that level, the family will have to make an offer for the rest of L&#8217;Oreal&#8217;s share capital.<\/p>\n<p>Based on their fundamentals, strong balance sheet and ability to increase their dividend Year Over Year, we have a <span style=\"color: #008000;\"><strong>BUY<\/strong><\/span> rating on the stock of Nesl\u00e9 as well as on the stock of L&#8217;Oreal.<\/p>\n<p style=\"text-align: center;\"><a href=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2014\/03\/40_loreal.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-9610 aligncenter\" alt=\"\" src=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2014\/03\/40_loreal.jpg\" width=\"360\" height=\"210\" srcset=\"https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2014\/03\/40_loreal.jpg 600w, https:\/\/www.pgmcapital.com\/wp-content\/uploads\/2014\/03\/40_loreal-300x175.jpg 300w\" sizes=\"auto, (max-width: 360px) 100vw, 360px\" \/><\/a><\/p>\n<p style=\"text-align: left;\" align=\"center\"><strong>India&#8217;s BSE SENSEX at all time Hig<\/strong>h:<br \/>\nIn India, the current account deficit has narrowed sharply, to 0.9 percent of gross domestic product in the October-December quarter, according to data on Wednesday, March 5th, improving sharply from the record high of 4.8 percent of GDP in the year ended in March 2013.<\/p>\n<p style=\"text-align: center;\" align=\"center\"><a href=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2014\/03\/BSE_37.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-9611 aligncenter\" alt=\"\" src=\"http:\/\/www.pgm-blog.com\/wp-content\/uploads\/2014\/03\/BSE_37.jpg\" width=\"280\" height=\"300\" \/><\/a><\/p>\n<p>The improving current account deficit, and the strong foreign inflows, have also boosted the rupee, which is up 12.2 percent since hitting a record low in late August.<\/p>\n<p>India&#8217;s blue chips have been the main drivers of the rally. On Thursday, March 6th,\u00a0ICICI Bank\u00a0(ICBK.NS) gained 3.1 percent and Reliance Industries (RELI.NS) rose 1.9 percent.<\/p>\n<p>The gains were widespread with the BSE mid-cap index rising 1.21 percent, including a 3.6 percent gain in Crompton Greaves (CROM.NS) (CROM.BO).<\/p>\n<p>Before following any investing advice, always take your investment horizon and risk tolerance into consideration and keep in mind that emerging market shares, the price of (food) Commodities, as well as the stocks of their producers can be very\u00a0volatile and that sharp corrections may happen in the short term.<\/p>\n<p>Yours Sincerely,<\/p>\n<p>Eric Panneflek<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Dear\u00a0PGM Capital\u00a0Blog readers, In this weekend&#8217;s blog edition, we want to discuss some of the most important events that happened in the global capital markets, the world economy and the world of money in the week of March 3rd, 2014. Brasil foods income grew with 38 percent in 2013. Warren Buffett cuts on bond allocation.<a href=\"https:\/\/www.pgmcapital.com\/nl\/highlights-of-the-week-of-march-3rd-2014\/\">[&#8230;]<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,25,23,9,10,19,20,12,13,29,15,22,1,18],"tags":[],"class_list":["post-9593","post","type-post","status-publish","format-standard","hentry","category-commodities","category-dividend-declaration","category-earnings-report","category-emerging-markets","category-eric-panneflek","category-financial-news","category-general-information","category-inflation","category-market-volatility","category-merger-acquisition","category-pgm-capital","category-the-week-in-review","category-uncategorized","category-world-economic-outlook"],"_links":{"self":[{"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/posts\/9593","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/comments?post=9593"}],"version-history":[{"count":0,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/posts\/9593\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/media?parent=9593"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/categories?post=9593"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pgmcapital.com\/nl\/wp-json\/wp\/v2\/tags?post=9593"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}