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Victor Niederhoffer: 12 Thoughts on DuPont
- This seems a nice retrospective
congestion play with the stock bouncing back and forth 5
points like a yoyo around 50 in 2000. Simple five-point
reversal systems take out about 60 points over the period.
- One has to admire a company that over a 200-year period
has been one of the leading U.S. companies and is today a
stalwart of the Dow Industrials and the S&P 500.
- What a fantastic innovative company this is. From its
beginnings as the premier U.S. maker of gunpowder and
dynamite, the explosives that helped us open up the country,
build the tunnels and move the mountains, they went on to give
us cellophane, nylon, Kevlar, Neoprene, plastics and freon.
- The company's leaders state that they honor the spirit
of contracts as well as the letter, and they seem to believe
it. What a contrast to the insurance companies that fight you
tooth and nail whenever you have a claim. It brings to mind
the old New York saying about why WASPs are necessary:
Somebody has to pay full price. A typical anecdote: Accused of
profiteering in World War I, the company did all its work on
splitting the atom in the Manhattan Project for a dollar over
costs. The government demanded 30 cents back because it
finished in 70% of the estimated time.
- Bjorn Borg's Monte Carlo tennis shop went belly up
partly because to maintain a chic air nobody in tennis shorts
was allowed into the place. One seems much the same at work in
Longwood Gardens, funded mostly by a bequest of the former
owner, a DuPont family member. Signs draw the attention to the
Longwoods' gardeners use of mosquito fish to catch mosquitoes,
and sticky strips and lady bugs and kaolin to catch bugs and
cats to catch mice -- but nary a pesticide.
- Yes, DuPont appears to be a company out of Atlas
Shrugged. They seem to be ashamed of their heritage. Their
slogan used to be "Better living and better products through
chemistry." Now they've stopped using that, and they're a
biology and electronics company, and oh yes, they use a bit of
chemistry, I'm told, in their hybrid seeds for farmers.
- The Hotel DuPont is a marvel, built in 1915 out of
limestone 12 floors high and still running. Unfortunately,
this has to be the only 100-year-old hotel in the world that
has adapted the infernal Hyatt method of reducing costs and
liability by refusing to give you windows that open. One can
understand it in the Vegas hotels and hospitals -- but in
Wilmington, Delaware? Excellent Howard Pyle painting of wagons
delivering DuPont gunpowder for the Battle of 1812, almost
making up for this mockery.
- DuPont invented freon, the refrigerant used to cool the
world's food since the 1930s. Freon was regarded as a miracle
substance because, unlike other refrigerants, it was non-toxic
and nonflammable. Eighty-five nations agreed to phase out
freon under the Montreal Protocol in an effort to protect the
ozone layer. DuPont also makes the replacement -- but the
corporate museum at Wilmington makes no mention of that.
- The lobby of the Hotel DuPont has a display devoted to
"The miracles of science," but it's entirely devoted to such
things as alliances with the EPA, spreading of work during the
Depression to save job, the company's innovative Blue Cross
health coverage, and its egalitarian policies of
nondiscrimination in the workforce (but where is Mr. Jew?) and
its biodegradable plastics.
- How did this company outsmart the Bronfmans to get them
to sell 25% of their shares back at a 10% discount when so
many others would have been willing to pay so much more? Why
is the answer to such questions always, "romance," as Rumpole
would say. In this case it was Kid Bronfman's desire to get
into the movie industry, where, as my daughter Galt points
out, one has only two benefits: getting ... and getting your
kids into the business.
- Amazing how many of our great industrialists have
devoted the major part of their last half of life to their
gardens. DuPont's Longwood Gardens, Vanderbilt's Biltmore
estate gardens in Ashville, N. Carolina, Cecil Rhodes'
botanical garden in Capetown, South Africa; the railroad
magnate Huntington's garden in San Marino, Calif.; Eastman's
35 gardeners in Rochester, John Rockefeller's tree farming,
Dan Grossman's planting at his Short Hills, N.J., estate, Mr.
E's tomatoes and trees.
- How many other companies are out there that are ashamed
of their roots and seek to palliate the ire of their enemies
through stating their purpose of humanitarian and egalitarian
improving of the environment rather than the pursuit of
profit, which by its very nature leads to harmony and mutual
benefit at every turn. (Witness the good that DuPont products
have done.) And is this the reason that DuPont's profit margin
is 0.5%, pretax? And are the others that have lost their
way good congestion plays also?
A practical and scholarly reader comments:
"Freon" is a brand name for R-12 CFC refrigerant (banned
Montreal Protocol in perhaps the most significant display of
religious-fervor-as-science since Galileo's beatings at the
hands of the
Pope). DuPont did not invent it. They merely trademarked and
quite successfully under the Freon name. R-12 was invented by
Midgley Jr. who worked for Dayton Engineering Labs (Delco)
direction of Charles Kettering. I would give credit to
reportedly only spent 3 days on the project before discovering
However, if you prefer to use the accomplishments of a known
to lionize the virtues of a corporate meritocracy, then
(owner of Delco during Midgley's research there) should get
I have one other note regarding big business's attempts at
the environmentalist/Neo-Luddite lobby. There ought to be a
quotient' assigned to their corporate profiles. The best DQ I
up with (woefully inadequate, but perhaps your brain trust can
Number of individual deaths attributed to marketed chemicals
there were any, lead, asbestos, etc),
multiplied by the average life expectancy of the victims (the
full lifespan used here for the sake of simplifying the
all divided by the total population times their increase in
expectancy from a pre-technology era benchmark (I use the year
the official asbestos (Kellogg Brown & Root)
total stands at 43,073.
Life expectancy for US citizens-
In 1900- 47.3 years
In 2000- 76.9 years
or a 29.6 year differential (62.5%!!).
43,073 x 76.9 years = 3,312,313 years
276,000,000 x 29.6 years = 8,169,600,000 years
For a death quotient (DQ) of .000405 for KBR.
While not defending the use of, and exposure to, known toxins
like asbestos, the DQ is a pretty solid counterargument to those
the benefits of science in favor of lamenting over its
Any toxin's case history will yield a similarly very small
leave the environmental damage quotients to the eggheads in
credits department at Cantor Fitz, as they are already way
ahead of me and might even manage to turn a profit on it.
DD is a great chart though. I am giddy with anticipation as we
reach the apex of this pennant. Thanks for mentioning it.
(Former refrigerator repairman)<
Comment from the
I think it was Jackie Mason who said of
wealthy Gentiles, "They LOVE animals ... hate PEOPLE, but love
In their waning years, no surprise that they withdraw to
Nature, building a fantasy play world. The final reward to
wealth, being left the Hades alone in one's garden.
Contrast to wealthy New Yorkers who in their golden years
take up the Upper East/Hamptons charity cocktail party
Ancient Chinese proverb: If you want be happy for an hour,
drink a bottle of wine; If you want to be happy for a year ,
fall in love: If you want to be happy for the rest of your
life, take up gardening.
Comment from an insider:
I used to work for the Mellon's law firm (including the
Mellon family work
well as their businesses). For many years the Mellons have
in a direction as paternalistic as bottom-line oriented. I
believe it is
direction which is at least partly the cause of the mediocre
businesses. Example: Mellon Financial (formerly Mellon Bank),
which is not
strictly bottom-line oriented, has been a mediocre performer
for many years.
You might recall that in the early 1970's, Mellon-controlled
Gulf Oil was
implicated in the foreign bribery scandals. Horrified by this
condone it), the Mellons got together & kicked out Gulf's CEO,
replacing him with someone who was as concerned with moral
rectitude as with profits. When Gulf later came under attack
by Boone Pickens, the new CEO lacked the cojones
fight him tooth & nail, & eventually surrendered, selling Gulf
its focus, then lost itself. Ironically, the loss of Gulf from
its Pittsburgh home turned out to be a bigger blow to the city
than any transitory scandal taint.