Wednesday, November 21, 2012

Deere Reports, Stock Down 4% (DE; CAT)

Well it's about freakin' time. Or, in the words of Homer Simpson Woo Hoo!

From the AP via Yahoo Finance:
Deere earnings hit by slowing economic growth 
Deere trims outlook on weak economy and production issues, after 3Q misses Wall St. forecast
The effects of a slowing global economy caught up to Deere & Co. in its fiscal third quarter, as its net income rose 11 percent but fell well short of Wall Street's expectations.

Deere also cut its revenue prediction for the year, and investors reacted strongly. Shares dropped more than 6 percent for their biggest daily decline in a year.

Delays in production lines also hurt the world's largest producer of agricultural equipment. Ongoing drought in the Midwest had a minimal impact, executives said in a conference call with analysts....MORE
As I mentioned on November 8th:
Our last ag post was Oct. 31's pair trade, long CAT/short DE:
Chartology: Deere vs. Caterpillar (CAT; DE)

It's working but barely, and definitely not today.
Here's the post where we put our imprimatur on the trade:
Chartology: Deere vs. Caterpillar (CAT; DE)
DE $85.29 -.21%, CAT $84.59 +.41%....
Current prices: DE $82.39, CAT $83.20.
So, since Oct 31:

Deere down $2.90 (-3.40%)
Cat down     $1.39 (-1.64%)
Profit            $1.51 on each $169.88 employed or 0.008888, unleveraged.

15.44% annualized but uncompounded for a deal where the pain of holding the position for 20 days is mitigated by one day's pleasure.

Woo effin Hoo