Miscellaneous Notes 5.12.16

Third Point Reinsurance’s (TPRE) Dan Loeb on Q1 2016 Results

We’re seeing some opportunities in distressed debt

“we’re seeing opportunities in distressed debt. So I want to stress. We’re not in a credit cycle where I think there’s going to be massive opportunities due to a slowing economy and large defaults. But we are seeing a lot of dislocations in various credits and we have been scooping up some very attractive names in – we’ve talked about this in the past, some fulcrum securities in energy companies. On the sovereign debt front, we’ve talked about Argentina. And there are a couple of distressed situations out there that we have been buying. I think structured credit is also – it was really off only for liquidity reasons, not for fundamental reasons. So we feel good about that portfolio. And I think the most interesting space right now is just in equities that are getting oversold or just underappreciated and under-owned that are in the industrial sector.”

Sotheby’s (BID) CEO Tad Smith on Q1 2016 Results

Do not expect art markets to return to 2014 or 2015 levels this year

“On our last earnings call, we said that we did not expect sale levels for the full year 2016 to reach the annual held levels of 2014 or 2015. And as of right now our view remains unchanged. However as I just outlined, recently, we observed the number of positive indicators most notably our Hong Kong sales series which was up 17% year-over-year. Of course our most significant data points for the second quarter kicked off tonight, with a number of important auctions to follow in the coming days so the next two weeks should provide all of us with a lot of good market intelligence. Until then we will remain cautiously optimistic.”

Dean Foods (DF) Gregg A. Tanner on Q1 2016 Results

See favorable supply/demand dynamics in dairy with supply outgrowing demand

“We expect global dairy fundamentals to continue to be overall supportive to our business as production growth continues to outpace demand. In the U.S., we continue to see domestic supply growth. Total U.S. milk production increased 1.8% year-over-year in March with production in the Midwest, Northeast and Northwest more than offsetting the continued decline in California. In addition, dairy herd continues to grow both sequentially and year-over-year. The current USDA forecast calls for 2016 milk production to increase 1.5% year-over-year. On the global supply front, the EU remains a leading contributor as their milk production has increased more 5% year-over-year. In contrast, we look at the continued decline of production in New Zealand. It has had minimal to no impact on the global markets. With U.S. butter and cheese prices remaining uncompetitive versus the international market, we continue to see a decline in overall U.S. dairy exports. Despite the temporary increase we saw in exports in January and February, the USDA published March data showing a decline of over 21% with the major drop in non-fed dry milk driving the decline. These supply and demand factors should continue to contribute to a relatively benign dairy commodity environment over the short term.“

Tyson Foods (TSN) Donald J. Smith on Q2 2016 Results

Low grain costs have helped us outperform

“ Obviously, our grain position is favorable this year with the low end of what we expect the five-year range of grain to be, and that helps over-deliver a bit.
And if you look going forward at what might cause any dip, it’s that level of fundamentals, primarily driven around the grain. But I tell you, we’ve done a very good job of utilizing the price discovery mechanisms afforded to us to be able to take a lot of the grain volatility out of our business. We’ve priced much more of our products off in some kind of a grain-based mechanism