MICRO NODETimestamp: March 9, 2020

DE

Deere & Company

COVID Agricultural Equipment Panic

UNJUSTIFIED PANIC

PandemicAgricultureConstructionSupply Chain

The Catalyst

“The COVID-19 pandemic severely impacted the industrial and agricultural machinery sector, including companies like Deere & Company (DE). Lockdowns led to significant disruptions in supply chains and a sharp decline in demand as agricultural and construction activities were halted or delayed. This resulted in decreased revenue as customers postponed purchases of machinery and equipment. **Macro Context:** 10Y Treasury Yield: 0.54%”

The Aftermath

“The thesis shifted as realized data stabilized and liquidity conditions normalized, undermining the worst-case assumptions embedded at the lows. As forced sellers exhausted and expectations reset, DE repriced higher with improving risk appetite and better forward visibility.”

Company Profile

Fundamental Overview (Current)

About

John Deere is the brand name of Deere & Company, an American corporation that manufactures agricultural, construction, and forestry machinery, diesel engines, drivetrains (axles, transmissions, gearboxes) used in heavy equipment, and lawn care equipment.

Sector

INDUSTRIALS

Industry

FARM & HEAVY CONSTRUCTION MACHINERY

Market Cap

$179.58B

P/E Ratio

35.85

Beta

1.00

Div Yield

0.98%

52W High

$674.19

52W Low

$400.36

Hindsight Engine

Normalization of Historical Volatility Clusters

Entry Delta

-32.6%

Recovery Alpha

+547.2%

Reference Peak

$151.9

Pre-Panic High

Panic Floor

$102.37

Moment of Capitulation

Drawdown Magnitude

-32.6%

Peak-to-Trough Delta

Alpha from Bottom

+547.152%

Total Return Delta

Macro Environment

Economic Indicators at Time of Event

Fed Funds Rate

1.09%

Inflation

1.23%

Unemployment

4.40%

10Y Treasury

0.54%

2Y Treasury

0.38%

30Y Treasury

0.99%

CPI

258.12%

Earnings Catalyst

Quarterly Report Data

Q4 2020Reported Feb 21, 2020

Reported EPS

$1.63

Estimated EPS

$1.27

Surprise

+0.36

Surprise %

+28.3%

Anatomy of the Crash

Sentiment Breakdown & Strategic Pivot Points

Stage 01: The Fear

At the panic low, there was extreme fear in the market, with headlines predicting long-term damage to the industrial sector. Analysts downgraded stocks like DE, citing concerns over prolonged economic downturns and uncertainty about future demand. The prevailing narrative was that recovery would be slow and arduous, with some suggesting it could take a decade for a full rebound.

Stage 02: The Turnaround

The turnaround was triggered by aggressive Federal Reserve stimulus measures, which injected liquidity into the markets and restored investor confidence. Additionally, positive news about potential vaccines and gradual reopening plans fueled optimism. The anticipation of pent-up demand for agricultural and construction machinery as economies reopened further supported the recovery.

Stage 03: Opportunity

If you had bought DE at the panic low of $102.37, you would be up +547% today. The COVID crash serves as a stark reminder that panic selling during black swan events can lead to significant wealth destruction. Investors who maintained a long-term perspective and bought during the downturn were richly rewarded.