 Good day, fellow investors. Bungie stock analysis. So the contents will give a company overview of the stock and the current business, what's going on at the current moment with the stock. We'll look at the cash flows and then an investment conclusions to discuss the risk and reward. Bungie is a food processing company buying it from the farmer, doing what has to be done and consequently selling it to those that want food to produce other food, etc. It's part of the ABCDs, Archer Daniel Midlands, Bungie, Cargill and Trayfus that have, let's say, a monopoly over food trade in the world. It's a tough business, farmers want to make money, everybody wants to make money, so thin margins and really efficiencies and scale are the key. They have an ugly business, food and ingredients business, some of the brands you might be familiar with from oils, oil seeds and whatever they do. They expanded their oil business by acquiring 70% of Lodders croclan in 2019 for almost 1 billion enterprise value, 1.35 billion, 1.6 billion in revenues the company with 100 million in EBITDA. So let's say a little bit 13 to EBITDA expected in the future took a three-year loan facility to finance, so very risky acquisitions and many of Bungie's acquisitions were such risky. Also an example is the sugar and ethanol business in Brazil, but they didn't get what they expected there because going into ethanol changes in regulations are what really disrupts the initial investment. So when you see a stock decline 40% in one year, you know something must be going on, however such ups and downs aren't unusual for Bungie as it was trading above 19, 2015, below 15, 2016, above 18, 2018 due to takeover rumors that didn't happen too expensive, probably they did ADEM and Glencore did an analysis and they weren't happy with what they found. Now the stock price is much lower and let's see whether that is a potential opportunity or it indicates really trouble. Most likely it indicates trouble because this decline is due to company specific businesses problems. One problem is the return on investment capital is lower than their cost of capital, so that's not good. ADEM's returns is much higher and even what doesn't help is ADEM's CEO saying how there is no urgency in acquiring Bungie as they have a lot of what Bungie has already and they have also a lot of trouble and their capital returns are higher etc. So you simply have a stronger, more powerful competitor which makes it difficult. The outlook is up and down so let's say stable for the year but when you hear the management discussing transitional years, repositioning work underway, you know that the business model they have been using isn't good for the environment which leads to turnarounds which is something Buffett never invests in because you want the underlying business to be strong and then you invest. This shows that Bungie's underlying business isn't that strong, hasn't been that strong and now it's up to the management to turn it around to make this a good investment. They had the previous business model who can guarantee us that they will turn it around nobody because they brought it into this situation. And then the last time if we look at cash flows, the last time they had good operating cash flows were in 2014 and since then those were even negative in the last two years and then working capital changes allowed for positive cash flows. So not operating but working capital which shows okay this might be trouble down the road. The total cash is down from 5 billion to 500 million. Current assets are down from 17 billion to 11 billion so really working on that working capital on the liabilities side liabilities are down 5 billion current assets are down 7 billion so they took more debt long-term debt went from 3 billion to 4.2 billion so they are really leveraging themselves stretching themselves which doesn't allow for really great things. A very interesting thing is other comprehensive income and those are the revenues, expenses, gains and losses under gap principles and IFRS that are excluding for net income. So they come after the net income as they are mostly unrealized and what they have is 6 billion 6.5 billion in unrealized foreign exchange translation adjustments from the investments they did in the past. Okay if the currency went down but you can revaluate the those assets that you bought then it's okay but that's something one that's really interested in bungee has to see okay is there some real value or did they really if they realize those assets if they sell them did they really lose 6.5 billion. As I said already negative cash flows over the last 10 years bungee's operating cash flows were 5.2 billion capital expenditures 8.2 billion so they really invested and leveraged themselves negative free cash flow of 3 billion but they didn't come to earning so they invested wrongly. Despite not returning any cash they kept increasing the dividend because if they cut the dividend that would really hit the stock price however they did repurchases when the stock price was relatively higher they didn't do them they are not doing them in the last two years and especially now as the stock is down and that's usually the wrong way to do things. You should buy more when the stock is down not when it's up but okay you do it when you have the cash and this is why I am against buybacks in general but specific buybacks should be good. So this kind of business again comparing it to ADM is simply better stronger operating profits 40 billion of assets against 21 billion of liabilities for ADM bungee has 19 billion of assets and 13 billion of liabilities so much more leveraged also thanks to the issues they have been having the last years. On the investment conclusions the operating cash flows are not positive so I must say that I don't know what will happen with bungee the probabilities of turning around are there the positives could be a takeover by Glencore or ADM now that the price is much lower or by a private company that's going to take it into pieces and sell the assets and improvement in margins also in Argentina Brazil that leads to higher cash flows a good restructuring that leads to higher returns of capital but those are all promises that give no certainty and there is ADM that's working on all cylinders growing taking advantage of bungee's weaknesses which makes it even more difficult so will they change I don't know thank you for watching if you prefer reading check my blog you have also newsletter with an old content overview so check also check that out thank you looking forward to the comments and interesting food stocks that offer 10 to 15 percent business returns over the long term please share them with us in the comments thank you and I'll see you in the next video