Seidman Investment Portfolio Organization

 

Company: 3M
 
Sector: Industrials (NYSE:MMM)

Fall '09 Sell Summary

3M is a decent large cap company that has performed moderately well. However, the company performance has not translated into good stock performance over the 5 year holding period. In fact, when including transaction costs, the stock was only profitable 9% of its holding. Although the firm is highly diversified, it is believed that the actual stock is traded at a diversified discount – essentially is over-diversification is reflected in the stock price.

Among other things the company also suffered from poor cash utilization (average FCF per year since 2004 was $3.05 billion!), looming legacy/pension costs, and underperformance compared to peers. And although the company is projected to achieve 6% growth in the coming year, IPO?s assets can be better utilized elsewhere.

 


Fall '09 Summary

3M is comprised of 6 widely diversified business segments which are responsible for almost 60,000 different products on the market and over $5 billion worth of product currently in the pipeline.  This is largely due to the efforts of the company's research and development program that is arguably the best in the industry.

3M has managed to maintain a CAGR of 16% over the past 4 years. And despite an economic downturn, quarter to quarter EBITDA growth has been positive over the last 3 quarters. Its EPS and revenues are some of the most consistent in the industry. The company has continued its impressive lineup of innovative products and continued its incredibly strong margin growths. This company is a stable, powerhouse for IPO's portfolio.

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Page last modified March 11, 2012