Cargill is a large private held firm responsible for supplying Alberger processed salt used by the fast food industry, as well as its influence on big food business across the globe.
What is Cargill, Inc.?
In case you haven’t heard of them before – Cargill is a family run business, left the descendants of the Macmillan and Cargill families.
The current family members own 90% of the company’s stake and have recently declared revenues of over 135.9 billion, with earnings of $2.32 billion.
What does Cargill, Inc. do?
Cargill supplies 22% of domestic US meat and 25% of grain exports.
It operates in 66 countries and employs a massive team of 140,000.
If this isn’t enough, Cargill, Inc. ranked 12 on Fortune 500, and it always does business through these other means:
- Distribution, selling and trading with agricultural commodities and grain.
- Produces palm oil.
- Deals in transport, steel, and energy.
- Production of livestock and feed.
- Producer of glucose, starch, vegetable oils and fats (for both industrial and domestic use), and syrup.
- The dominant player in financial services.
Although in 2003, a slice of its financial operations went into the hedge fund ‘Black River Asset Management, which has an estimated $10 billion of liabilities and assets.
It also owned 2/3 shares of The Mosaic Company, but was then sold in 2011.
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What is the Mosaic Company?
They are producers of potash and concentrated phosphate nutrients, while also being the largest fertilizer company in the world.
64% of its shares were sold in 2003, when Cargill was under IPO pressure, enforced by charitable trusts and private shareholders.
What is an IPO?
An IPO is when a private company sells assets to the public, due to the massive size of the business.
How big is Cargill, Inc.?
On an annual list provided by Forbes, Cargill has been consistently placed at the top – with 2015 showing a revenue worth of $120.4 billion (putting the company amongst the top 15 places for the Fortune 500 list).
Cargill, Inc.’s debt performance:
It is very goal orientated on paying debt – giving the firm, good credit rating.
Standard & Poor’s and Fitch have both given the company A2 rating.
Here’s a graph on how their debts shrunk over the last 5 years.
This graph shows a drop from $22.5 billion to $12.5 billion.
Does Cargill have any market rivals?
While you cannot directly purchase Cargill shares (at this time), it is possible to invest in either of their largest rivals – Archer Daniels Midland Company and Bunge Limited.
In the last fiscal year of 2015:
Bunge had market capitalization of $58 billion and revenue of $57.8 billion.
Archer Daniels Midland Company
The Archer Daniels had a market capitalization of $81 billion and estimated revenue of $81.2 million.
A look at their stock performance
Both companies have made very prosperous gains over the last 5 years; Bunge’s shares grew by 21%, and Archer Daniels Midland Company 39%.
This graph shows growth from both companies in the last year:
Although this graph does show a drop in value, it is currently climbing back up.
If you look at the last ten years; Bunge has increased by 29%, and Daniel Midlands a staggering 71% increase.
Is Cargill, Inc. likely to become a public company in the future?
There has been enormous pressure from its shareholders to initiate an IPO.
However, when the heat is turned up they do maneuver to try to keep them happy – with today’s result still being the Cargill and Macmillan families being the largest private shareholder.
The disadvantages of going public
The company could lose their edge in reaping the benefits from numerous ventures (especially in foreign countries), which would start off with immediate losses – angering shareholders to block such a move.
Many risks didn’t start reaping in the high rewards for many years later.
Cargill wouldn’t be able to invest in companies for more turbulent times, as it currently does.
Cargill would be more public
It’s a business that has a relatively low profile, and manages to stay out the public’s attention.
However, an increase in its profile may be bad for business – it could be seen as a scapegoat for any bad reputations from the agriculture market.
Going public would mean higher recognition from the public, while being more vulnerable to unwanted attention and scrutiny.
Outside investors and security analysts
Currently, the business operates with low margin and at high-volumes.
Outsiders may influence it to enter new areas which may not suit the firm.
This could result in a drop in employee loyalty and morale, especially for a call for downsize and cause redundancies.
Currently, the majority of their employees have no desire to leave, with very high morale all around.
Cargill, Inc. is a stealthy company, whilst its competitors are definitely ones to keep your eye on – if you are looking for a shrewd investment opportunity.