We came across a bullish thesis on Dow Inc. on Quipus Capital’s Substack. In this article, we will summarize the bulls’ thesis on DOW. Dow Inc.'s share was trading at $23.86 as of December 2nd. DOW’s trailing and forward P/E were 32.65 and 13.61 respectively according to Yahoo Finance. Avidity Biosciences (RNA) Soars 42% on $12-Billion Novartis Merger Dow Inc. (DOW), restructured after its 2019 de-merger from DowDuPont, operates as a major global commodity chemical producer with a portfolio centered on o ...

Financial Data and Key Metrics Changes - For Q3 2025, the company reported EBITDA of $313 million on net sales of $2.8 billion, with a loss of $38 million or $0.29 per share, reflecting a decrease in sales and EBITDA compared to Q2 2025 [7][14] - The loss in Q3 2025 was $26 million higher than in Q2 2025, primarily due to lower average sales prices, especially in PVC resin [14][21] - The company recorded a non-cash impairment charge of $727 million for goodwill associated with its North American chlorovinyls business unit [4][10] Business Line Data and Key Metrics Changes - The Housing and Infrastructure Products (HIP) segment delivered EBITDA of $215 million on $1.1 billion of sales, with sales volumes 6% lower compared to Q2 2025 [16][17] - The Performance and Essential Materials (PEM) segment reported sales of $1.7 billion, down $46 million from Q2 2025, driven by a 4% decline in average sales price [20][21] - HIP's EBITDA margin declined to 20% due to lower sales volume and period-related expenses, while PEM's EBITDA fell to $90 million compared to $297 million in Q3 2024 [17][22] Market Data and Key Metrics Changes - North American residential construction demand has softened in 2025, impacting sales volume in the HIP segment, although total sales remained comparable to 2024 [7][8] - The company noted a shift in sales mix towards lower-priced products in the HIP segment due to affordability issues faced by home buyers [8][20] - The global demand for PEM products, particularly PVC resins, has softened, contributing to a challenging macroeconomic environment [10][21] Company Strategy and Development Direction - The company is focused on a three-pillar strategy to improve PEM's performance: enhancing plant reliability, reducing costs, and optimizing the manufacturing footprint [10][11][28] - The HIP segment aims for long-term organic sales growth of 5% to 7% per annum, supported by new product innovations and strategic acquisitions [25][27] - The acquisition of ACI is expected to expand the company's global compound business and access to new markets, particularly in automotive and electrical sectors [9][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term growth outlook for the HIP segment despite current affordability headwinds in the housing market [8][20] - The company anticipates that the global supply-demand imbalance will improve, which will positively impact the chlorovinyls business in the medium to long term [10][70] - Management highlighted the importance of cost reduction actions and improved operational reliability to return the PEM segment to profitability [15][28] Other Important Information - The company expects total capital expenditures for 2025 to be approximately $900 million and has achieved $115 million towards its structural savings target for the year [23][22] - The company has a cash and investments balance of $2.1 billion and total debt of $4.7 billion as of September 30, 2025 [22] Q&A Session Summary Question: How will the weakening polyethylene market affect earnings in Q4? - Management acknowledged a slight weakening in polyethylene prices but expects stable operating efficiency and demand [32][33] Question: Is the board committed to the current portfolio structure? - Management believes in the synergy of the combined businesses and expects improvements in the PVC business as market conditions stabilize [34][36] Question: What is the near and mid-term outlook for PVC? - Management noted challenges in the chlorovinyl chain but is focused on cost reductions and improving reliability to enhance profitability [40][41] Question: Can you provide details on the ACI acquisition's expected performance? - The ACI business is expected to have good margins and synergies with the existing compounds business, aligning with HIP segment margins [42][43] Question: Why is the HIP guidance lower? - The lower guidance is attributed to a shift in product mix and period-related costs, but management remains optimistic about 2026 construction activity [47][50] Question: What is the outlook for the caustic soda market? - The market is well supplied, and pricing is expected to remain stable [52] Question: How is the company addressing affordability issues in the housing market? - The company is adjusting its product mix to include more affordable options to meet builder needs [104]

Financial Data and Key Metrics Changes - For Q3 2025, the company reported EBITDA of $313 million on net sales of $2.8 billion, with a loss of $38 million or $0.29 per share, reflecting a $26 million increase in loss compared to Q2 2025 primarily due to lower average sales prices, especially in PVC resin [6][16][24] - The company recorded a non-cash impairment charge of $727 million related to goodwill associated with its North American chlorovinyls business unit, which significantly impacted financial results [3][10][16] Business Line Data and Key Metrics Changes - The Housing and Infrastructure Products (HIP) segment delivered EBITDA of $215 million on $1.1 billion of sales, with sales volumes 6% lower compared to Q2 2025, but comparable to Q3 2024 [18][19] - The Performance and Essential Materials (PEM) segment saw sales of $1.7 billion, a decrease of $46 million from Q2 2025, driven by a 4% decline in average sales price, which more than offset a 1% increase in sales volume [21][22][24] Market Data and Key Metrics Changes - North American residential construction demand has softened in 2025, impacting the HIP segment, although sales volumes remained stable compared to 2024 [6][8] - The global demand for PEM products, particularly PVC resins, has softened, contributing to a challenging macroeconomic environment and an extended trough in the chlorovinyl chain [10][24] Company Strategy and Development Direction - The company is focused on a three-pillar strategy to improve PEM's performance: enhancing plant reliability, reducing costs, and optimizing the manufacturing footprint [11][13][29] - The company is committed to long-term growth in the HIP segment, supported by investments in new facilities and acquisitions, such as the ACI acquisition, which will expand its global compound business [9][21][27] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term growth outlook for the HIP segment despite current affordability challenges in the housing market, citing ongoing investments and a solid pipeline of new products [8][27] - The company anticipates that the global supply-demand imbalance will improve over time, which will positively impact the chlorovinyls business [10][29] Other Important Information - The company expects total capital expenditures for 2025 to be approximately $900 million and has achieved $115 million towards its structural savings target of $150 million to $175 million for 2025 [25][24] - The company has a cash and investments balance of $2.1 billion and total debt of $4.7 billion as of September 30, 2025 [24] Q&A Session Summary Question: How will the weakening polyethylene market affect earnings in Q4? - Management acknowledged a slight weakening in polyethylene prices but expects stable operating efficiency and will strive to create value in that segment [35][36] Question: Is the board committed to the current portfolio structure? - Management believes in the synergy of the combined businesses and expects improvements in the PVC business as market conditions stabilize [38][39] Question: What is the near and mid-term outlook for PVC? - Management noted challenges in the chlorovinyl chain but is focused on cost reductions and improving reliability to return to acceptable financial returns [44][46] Question: Can you provide details on the ACI acquisition? - The ACI business is expected to have good margins and synergies with the existing compounds business, enhancing overall performance [48][49] Question: What are the reasons for the revision to HIP guidance? - The revision was due to a shift in product mix and non-recurring period-related costs, but management remains optimistic about the repair and remodeling segment [53][55] Question: How is the company addressing affordability issues in the housing market? - The company is adjusting its product mix to include more affordable options to meet customer needs [112]

Market Overview - The current market environment is characterized by a lack of margin for error, with risks in the real economy being underestimated [2] - The US economy is expected to experience a slowdown in growth, particularly in the third quarter, continuing into the second quarter of the next year [6][7] - The AI buildout boom is currently offsetting the economic slowdown, but if the economy worsens, it could negatively impact the market [8] AI Sector Insights - The AI buildout is still accelerating, with significant investments and developments expected to continue [3] - Companies like Oracle are projecting substantial revenue growth, indicating a competitive landscape in the cloud business [13] - Some AI-related stocks are becoming overvalued, while others, like Microsoft, are still considered undervalued [14] Real Economy and Value Stocks - Many real economy stocks, particularly in the commodity chemical and industrial sectors, have seen significant declines, with some companies reporting a 50% year-over-year drop in EBITDA [4][10] - There is a focus on undervalued sectors such as real estate, energy, and healthcare, with real estate trading at a 7-8% discount to fair value [16][17] - Specific undervalued stocks include Ventas and Health Peak in the healthcare REIT space, and Bristol Myers in the healthcare sector, which is trading at a 33% discount to fair value [19][20] Financial Sector Analysis - The financial sector is viewed as overvalued, with expectations that large banks will report strong numbers, but smaller overlooked names like LPL Financial are considered undervalued [22][23] Recommendations on Portfolio Adjustments - Stocks like Reddit and Sherwin Williams are recommended for profit-taking due to their overvaluation, with Reddit trading at a 50% premium and Sherwin Williams at a 30% premium to fair value [25][28]

Core Insights - Berkshire Hathaway Inc. has announced a definitive agreement to acquire Occidental's chemical business, OxyChem, for an all-cash transaction value of $9.7 billion, expected to conclude in Q4 2025 [1][2]. Group 1: Acquisition Details - The acquisition involves OxyChem, which manufactures essential commodity chemicals used in water treatment, pharmaceuticals, healthcare, and both commercial and residential development [2]. - OxyChem will become an operating subsidiary within Berkshire Hathaway, enhancing its portfolio of diverse businesses [3]. Group 2: Company Overview - Berkshire Hathaway Inc. is a multinational company engaged in various sectors, including insurance and reinsurance, utilities and energy, freight rail transportation, manufacturing, services, and retailing [3].

Core Viewpoint - Citi analyst Patrick Cunningham has lowered the price target for Huntsman (HUN) to $8.50 from $9, maintaining a Neutral rating on the shares due to weak seasonal demand growth and inventory surplus [1]. Financial Estimates - The firm has reduced Q3 and Q4 EBITDA estimates by up to 12% [1].

Core Insights - Berkshire Hathaway has announced a definitive agreement to acquire Occidental Petroleum's chemical division, OxyChem, for $9.7 billion in cash, marking its largest transaction in three years [1][3] - This acquisition reflects Berkshire's strategy of investing in profitable, real-world industrial assets rather than chasing high-growth momentum [2][5] - The deal is expected to close in the fourth quarter of 2025, pending regulatory approvals, and will be funded from Berkshire's cash reserves, which were nearly $340 billion at the end of the last quarter [9] Strategic Importance - The acquisition aligns with Berkshire's historical approach of purchasing robust businesses that are leaders in their fields, transforming low-yielding cash into a profitable asset [3][4] - This move demonstrates a disciplined financial approach, as management identified an external opportunity that is believed to create more long-term value than share repurchases [7][13] - The acquisition of OxyChem, a global producer of essential commodity chemicals, provides a stable demand base and consistent performance, with a reported pre-tax income of $213 million for the second quarter of 2025 [9] Leadership and Future Outlook - Vice Chairman Greg Abel, the designated successor to Warren Buffett, played a key role in this transaction, signaling continuity in leadership and capital allocation decisions [6] - The acquisition reinforces Berkshire's core philosophy and strategic focus, prioritizing stable earnings over speculative gains, solidifying its status as a cornerstone investment for long-term value [10][13] - Berkshire's stock has delivered a year-to-date gain of approximately 10%, reflecting a deliberate strategic choice to avoid high-valuation technology sectors [10][11]

Core Insights - Dow Inc. is recognized as one of the 10 highest dividend-paying stocks in the S&P 500 [1] - The company has faced significant challenges, including a 50% dividend cut and a nearly 42% decline in stock price since the beginning of 2025 [2] - Despite these challenges, Dow Inc. is focusing on its core strengths, such as manufactured integration and sustainability, to improve its performance [3] Financial Performance - Dow Inc. paid $496.0 million in dividends to shareholders in the last quarter, maintaining an annual dividend of $0.35 per share, resulting in a dividend yield of 6.10% as of September 27 [4] Strategic Focus - The company is shifting its focus towards cost-cutting, asset optimization, and capital preservation in response to volatile market conditions [3] - Dow Inc. emphasizes innovation, global reach, and an integrated value chain as key drivers for long-term success [3]

Group 1: Dividend-Paying Stocks Overview - Dividend-paying stocks are considered a reliable source of passive income, with top payers providing cash payments consistently over decades [1] - Companies like Dow and AGNC Investment offer yields significantly above the market average, with Dow at 5.9% and AGNC at 14.9% [2][9] Group 2: Dow Company Analysis - Dow's stock has decreased by approximately 38% this year, primarily due to a 50% dividend cut announced in July [4] - The company produces polyethylene and other commodity chemicals, facing challenges from increased domestic supply in China and rising U.S. interest rates [5] - Dow is closing unprofitable facilities in Europe to reduce operating costs amid a global supply glut and fluctuating tariffs [6] - A plan to reduce capital expenditures by $1 billion in 2025 may help Dow maintain its dividend commitment until market conditions improve [7] Group 3: AGNC Investment Analysis - AGNC Investment is a real estate investment trust (REIT) that invests in mortgage-backed securities, offering a high yield due to its borrowing strategy [10] - The average yield from AGNC's assets increased from 3.72% to 4.87% year-over-year, while its cost of funds rose from 0.63% to 2.86% [12] - AGNC's monthly dividend payment of $0.12 per share has been reduced three times since 2015, indicating potential future reductions due to profit margin pressures [13]

Group 1: Dow Inc. - Dow Inc. has reduced its quarterly dividend payout by 50% to $0.35 per share, leading to a significant market reaction with shares losing about 31% of their value from July 23 to August 11 [3][5] - The stock now offers a yield of 6.7%, which is attractive given the current price drop [3] - Dow's operations are affected by rising interest rates and increased competition from China, which has ramped up its own supply of polyethylene and other chemicals [4][5] - The company is expected to save an additional $992 million annually due to the reduced dividend payout, which will help maintain financial stability [6] - Dow has also announced the shutdown of three facilities in Europe and a $1 billion reduction in capital expenditures for 2025 to further cut costs [7] Group 2: UnitedHealth Group - UnitedHealth Group is the largest health benefits management company in America and has consistently increased its dividend payout, raising it by 342% over the past decade [8] - The stock is currently down about 50% this year, offering a yield of 3.5% [9] - The company expects to earn an adjusted $16 per share in 2025, significantly above the annualized dividend payment of $8.84 per share [10] - Although there are temporary challenges due to higher healthcare expenses from new Medicare Advantage patients, these costs are typically passed on to health plan sponsors and patients, ensuring long-term stability [11]