Monsanto CEO Sells $10 Million of Stock Before Global Protests As JPMorgan Questions Stability
This could just be an example of getting out of some stock near the top but the timing suggests otherwise as the next March Against Monsanto is one month away (May 24). The total for those 95,000 shares is about almost $10.5 million. Another executive exercised options on approximately one-third of his holdings.
St. Louis Biz Journal
Monsanto Co. – Hugh Grant, chief executive, sold 95,000 shares April 15 at $110.34 per share and now holds 380,533 shares. Tom Hartley, officer and treasurer, exercised options for 7,900 shares April 15 at $20.81 per share. He sold 7,900 shares April 15 at $110.51 per share and now holds 15,537 shares.
In the latter half of 2013, Grant also sold 40,000 shares. Hartley sold about 10,000 shares. Those transactions were reported after an August 2013 article noted hedge funds were becoming increasingly wary of holding Monsanto stock.
Monsanto Company (NYSE:MON) has had one of the most up-and-down years of the stocks we track. Shares of the ag behemoth have been unable to get on a run in 2013, as constant drama over GMOs seems to be hitting the newswires daily. With that in mind, it appears that some hedge funds want nothing to do with it.
Out of the hedge funds we follow, Stephen Mandel’s Lone Pine Capital had the most valuable position in Monsanto Company (NYSE:MON), worth close to $613.3 million, accounting for 3% of its total 13F portfolio. On Lone Pine Capital’s heels is Andreas Halvorsen of Viking Global, with a $414.5 million position; 2.3% of its 13F portfolio is allocated to the company. Other peers with similar optimism include Phill Gross and Robert Atchinson’s Adage Capital Management, John Griffin’s Blue Ridge Capital and Jason Capello’s Merchants’ Gate Capital.
Since Monsanto Company (NYSE:MON) has experienced declining interest from the entirety of the hedge funds we track, logic holds that there exists a select few hedgies that decided to sell off their positions entirely at the end of the second quarter. At the top of the heap, Jeffrey Vinik’s Vinik Asset Management said goodbye to the largest stake of the 450+ funds we monitor, totaling close to $100.8 million in stock. Sean Cullinan’s fund, Point State Capital, also dropped its stock, about $54.7 million worth. These transactions are interesting, as total hedge fund interest was cut by 4 funds at the end of the second quarter.
Correlation is not necessarily causation but it can’t be ignored that these sales followed significant periods of negative press for Monsanto and the GMO biotech sector.
Recall last May’s protests where over 2 million people in 52 countries participated. The company’s stock actually declined a few days prior to the march after headlines which need no alteration, “Monsanto Sees ‘Elitism’ in Social Media-Fanned Opposition“, based on quotes from CEO Grant.
There was also the discovery of unapproved Monsanto wheat crop found growing in Oregon, followed by the news that Japan canceled U.S. wheat orders on GMO fear.
06/02: GMO genetic pollution alert: Genetically engineered wheat escapes experimental fields planted across 16 states
06/05: Monsanto can’t explain how GMO wheat survived
06/08: Monsanto pushes bizarre conspiracy theory to deflect blame for GE wheat contamination of commercial crops
Some will suggest that this was simply a high point in the cycle of the company’s shares. This chart from 2012-13 shows share values approaching the high at the time in May 2013.
Wall Street vultures gathering?
Earlier this April, it was noted by JPMorgan analysts that Monsanto may need to alter the company’s structure to achieve continued success in Wall Street circles.
Monsanto Co. (MON) may attract an activist investor after its shares underperformed since a breakup of the world’s largest seed company may create more value for investors, JPMorgan Chase & Co. said.
“We think there is a reasonable possibility of an activist appearance at Monsanto, although we have neither intimations nor knowledge of any activist intentions,” JPMorgan analysts led by Jeffrey J. Zekauskas said today in a note.
Monsanto could explore the sale of its Agricultural Productivity segment, which makes Roundup herbicide, said Zekauskas, who raised his rating on the stock to buy from hold. The St. Louis-based company could also take on $11 billion in debt to buy back shares, he said.
Activist shareholders have already targeted Monsanto’s two largest U.S. competitors in the past year. Daniel Loeb’s Third Point LLC has called for a breakup of Dow Chemical Co., which produces genetically modified seeds as well as petrochemicals. DuPont Co., another chemicals-and-seeds conglomerate, is spinning off its titanium-dioxide business after Nelson Peltz’s Trian Fund Management LP amassed a stake.
Independent of this development, opposition to GMO crops has reached a level of concern on Wall Street.
During a February quarterly earnings conference call, Monsanto executives discussed positive earnings growth, many metrics of double digit percentage increases, marking the supposedly good quarter for the biotech giant with just over $3 billion in sales during the period.
A lot of the questions after the prepared statements from Monsanto executives were in regard to the reported acreage variations, mainly in corn. The questions came in the form of price mix, yield targets and reduced crop spraying and the Monsanto team dodged the problem areas just as artfully as the typical Fortune 500 exec would in those situations. Two particular statements stand out from the deceptively optimistic assessment of threats to profitability and both are on the subject of consumer opposition to GMO’s.
David Begleiter of Deutsche Bank:
Given last week’s Cheerios news, what’s your view on this potential growing resistance to GMO’s and what can you guys do to offset that, or put your case forward more aggressively?
Hugh Grant, Monsanto CEO: The Cheerios news, *laughs*, the interesting thing with Cheerios over that particular brand is that they’re made from oats and there are no biotech oats in existence today. So I think, you know, we’ve talked for years, we support voluntary labeling and that was up to companies to do. I think what you saw last week was the first real live example of true voluntary labeling and probably a little bit of marketing as well. I would say this, since the last 6 months, maybe 8 months now, we’ve had a better dialogue with the broad food industry than I’ve seen in the prev 10 years. The backend of last year September or October of last year, you saw the food industry led by Grocery Manufacturers Association getting out there and posting websites that talked about the safety and benefits of these technologies, so you know, it’s a lively debate, I think we’re going to see more of these marketing initiatives and more voluntary labeling but I um, like the fact that there’s a dialogue and that the food industry is in the game and is actively discussing these technologies. It’s a lot healthier than it’s been in the last 10 years I think.
About 10 minutes later, John Roberts of UBS asked a question about GM wheat.
Roberts: and secondly Rob, you kinda slipped in the wheat advancement to phase 2 in the appendix there, while it has technically moved forward, has anything market-wise changed in terms of customer interest or receptiveness around having GM wheat?
Rob : um I um would say, *thinking* I’m glad you noticed that. yea, so, We uh field tested and advanced uh one of the uh first wheat biotech products uh, based on uh improvements in uh in uh weed control and uh
from an overall market perspecitve, uh uh you know the grain industry, and the uh and the uh the uh wheat industry specifically, the wheat trade industry has remained uh very interested and supportive of uh of biotech advances.
I mean uh a wheat farmer is also generally a corn and soybean farmer and uh they understand the benefits of the technology, and the wheat industry has uh has watched the uh the benefits this has brought to both corn and soybean and so uh we continue to make advances uh.
uh we’re still several years away from product launch, but uh it’s nice to see those products in the pipeline. thanks for noticing.