Contrarian Value Ideas

[gfp927z]

Any ideas on ADM as a value play?

The chart is starting to look interesting for a rebound, but with the investigation going on, I'm thinking it might turn out to be 'value trap'. The company's comments try to minimalize the risk of earnings revisions, etc, but it looks like they finagled their numbers in order to boost management's bonuses. The big question is whether this will somehow get glossed over with minimal repercussions, or is it just the beginning of trouble for the company? The CFO is reportedly on administrative leave, pending an internal probe, and Bloomberg reports that "the US Attorney’s Office in Manhattan has launched an investigation into the reporting of inter-segment transactions", which sounds pretty serious.

The chart suggests a bounce to the 50 MA might be in the cards (58.7 area), but beyond that may require a resolution to the investigation uncertainty. Just a guess though..



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