Don’t be frightened by the title; I have no “curious” new product that gives you synthetic exposure to markets flushed with loose capital fueled by ravenous speculators that yields stress, write downs, and a murky promise of a return. Commodities have turned out to be the bust of the year. Trending toward the stratosphere of never-ending economic appetite only six months ago- crude, copper, corn, and all the rest have plummeted towards historical averages as whimpering hedge funds tuck their tales, retail investors yank their hair in dismay, and the IEA reminds us all of the horrific year to come. The Materials sector has been whipped left and right as the metals and mining sub-sector literally imploded, and chemicals acquiesced to the broader market.
Construction materials as well as containers and packaging are the top two sub-sectors of the year, but construction materials’ performance has been of late in response to the multitude of infrastructure initiatives announced around the globe. Much is still to be determined on the time scale of those initiatives and the specific projects which will receive the earliest approval. That leaves containers and packaging as the top prospect for the new year as 2008 culminates in an unenergetic fragmented week of low volume trading. As I recount my portfolio’s battering to look forward to 2009, I find myself filled with grief- Greif, Inc. (GEF: 33.43, 0.00 (0.00%)). Dominating its relatively small list of competitors on numerous metrics, Greif offers superior growth, returns, and liquidity.
The Rundown
Established in the 1870’s by the Greif Brothers, wood was originally their line of business as they provided wooden barrels, kegs, and other industrial packaging. In the latter part of the 1900’s they transitioned to steel, fiber, and intermediate bulk containers, becoming the most comprehensive industrial packaging company in the world with a 30% market share. Still the primary source of profits, their industrial packaging segment offers services to a wide range of end markets including but not limited to: food and beverage, automotive, building products, books and furniture, pet foods, sugars, and fertilizers. Their paper packaging segment offers containerboard and corrugated products that supply an equally diversified customer profile. They also have a negligible timber segment that harvests almost 300,000 acres in the U.S and 30,000 acres in Canada.
