Archer Daniels (ADM) was a favorite value name and shares are +23% YTD as Ag markets have rallied sharply. We featured the name on 8/4 with the following write-up:

“Archer Daniels Midland (ADM) with 3,000 December $65 calls bought for $1 to $1.05 into the mid-day lows and volumes over 5,000X now. ADM had buyers of the January 2023 $55 calls 1000X on 7/26, a more than $700K buy, and still has short puts in open interest from the $65 and $55 strikes from mid-May and June. Shares have been on a big run since the March 2020 lows and pulling back recently to the 200-MA with a narrow range over the last month. A move back above $60.65 key to reclaiming the bull trend and room higher to $67 and a high-volume node from May. A breakout to new highs targets $85. The $33.4B company trades 13.1X earnings, 0.45X sales, and 1.5X book with a 2.5% yield. ADM is a leader in commodity processing and benefitting currently from supply/demand tightness in the current macro environment, especially from China.  They’ve undergone a big multi-year investment cycle into tech and their supply chain that is driving significant savings and efficiency while allowing them flexibility to focus on innovation and profitable growth. ADM launched a program called IFD earlier this year which realigns their human nutrition business as well as their go-to-market approach across foods, beverages, and health and wellness. The program is starting to yield positive returns as they expand their sales pipeline and win new contracts in a high-margin, fast-growing business.  Analysts have an average target for shares of $65 and a Street High of $78. Jefferies starting at Hold with a $55 PT recently, positive on their Nutrition business but concerns over peak earnings. Baird positive citing sustained improvement in export demand from China, a recovery in foodservice, and strong operational performance. Barclays positive in May noting that ADM has long-term tailwinds to margins from potential for more feedstock demand for renewable green diesel. Short interest is minimal. Hedge fund ownership fell 3.7% in recent filings. ADM has seen some large insider buys lately as well including a $1M buy from the CEO on 7/29 at $59.54. Another SVP also bought $300K in stock at $58.40 in March. ”

ADM has continued to draw bullish positioning and the long-term LEAP call buyers have scored a major win.