Loading Up on Dean

Dean Foods (DF) is crashing today after the spin-off of WhiteWave (WWAV). It is around $17. WhiteWave has been up and down today between $17 – $19. I have loaded up on shares of DF. I am not sure why Dean is down today. Here is the quick math.

Assuming WhiteWave at $17. Dean still has 150 million shares of WWAV.

$2.94 billion worth from WWAV IPO means rest of dean is valued at 300 millon?

 

11 thoughts on “Loading Up on Dean

  1. It appears the sell-off may be related to the downgrade. Interestingly, the downgrade only appears to be based on the stocks “volatility” and not any underlying factors.

    “Dean Foods, meanwhile, received a downgrade from Stifel Nicolaus, which cut its rating on the stock to hold to reflect the rapid stock-price move in the last two weeks due to the higher-than- expected valuation for the WhiteWave IPO.”

    http://investing.businessweek.com/research/stocks/news/article.asp?docKey=600-201210261057DOWJONESENRGYSVC001141-1&params=timestamp%7C%7C10/26/2012%2010:57%20AM%20ET%7C%7Cheadline%7C%7CU.S.%20HOT%20STOCKS%3A%20Expedia%2C%20VeriSign%2C%20Deckers%20Outdoor%2C%20Arch%20Coal%2C%20Dean%20Foods%7C%7CdocSource%7C%7CDow%20Jones%20and%20Company%2C%20Inc.%7C%7Cprovider%7C%7CACQUIREMEDIA%7C%7Cbridgesymbol%7C%7CUS;EXPE&ticker=EXPE

    • Yeah I saw the downgrade this morning. They were saying that they are valuing dean post spin-off. I dont know what that means since they still hold 150 million shares!

          • Sorry, I am fairly ignorant in regards to evaluating stock prices. That’s why your blog is interesting (trying to see the logic and how it is done).

            I was just using finance.google.com which says DF has a -7.94 EPS. I haven’t looked at earning statements or anything.

          • Yes, that charge was one time non-cash charge on their Fresh Dairy Direct business last year. But all segments are profitable.

  2. 15.70 probably would have been a good entry point. I bought at 17.30 during the initial fall this morning. I feel like I may be missing something, but the math seems straightforward enough that it is still highly undervalued.

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