Darling: Recurring Cash Flow and Longer-Term Societal Tailwinds

Ian Clark of Dichotomy Capital presented his in-depth investment thesis on Darling Ingredients (NYSE: DAR) at Wide-Moat Investing Summit 2018.

Thesis summary:

Darling Ingredients is a global developer and producer of sustainable ingredients from edible and inedible bio-nutrients. The company has transitioned from a cyclical business whose profits were driven exclusively by the agricultural cycle to a lower-risk business that is less cyclical, while still generating prodigious cash flow.

Darling has several longer-term tailwinds. Chief among them is increased integration of biofuels into the worlds transportation fleets. A largely unknown asset is the Diamond Green Diesel joint venture, of which Darling owns 50%. This JV is capitalizing on Low Carbon Fuel Standard Credits. By Ian’s estimates, Diamond Green Diesel may produce more FCF than the entire core Darling business.

Darling offers investors the opportunity to invest in a business with recurring cash flow and longer-term societal tailwinds.

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About the instructor:

Ian Clark is the Managing Partner of Dichotomy Capital, a broad mandate investment manager that looks for uncorrelated returns in the public and private markets. He began his career in chemistry designing organometallic catalysts and novel synthetic routes. He received his M.S. in Chemistry from the University of Oregon. The dislocation of 2009 led him to research a better way to invest. Applying the same approach utilized in his science background, Mr. Clark began publishing his investing ideas to receive feedback and criticism. Applying his science background to investing, Dichotomy Capital focuses on sectors where technical expertise can lead to better investment returns.