Nice write up. I have looked and read about this company several times over the years, but it never seems to go anywhere. And I would be concerned about coffee prices going forward. So the hedging is a very big deal. Perhaps there is still one nice puff going forward. Or it could just be a value trap. I hope the former will occur. Thanks. Good work.
Same as above - looked at it over the years and always put it in the yeah looks interesting but a lot better opportunities elsewhere rather than take the risk on this
With lower coffee futures, their costs should also come down, so margins shouldn’t be affected too dramatically in the long run. That said, in the short term, there will likely be some impact, as they’ll have to work through older inventory bought at higher prices.
Take a look at the S-3 that was filed on 3-27-2025. Appears to me to be another red flag, plus if you read further, there are anti-takeover provisions, which appear to favor management and not shareholders. Thoughts are welcome, especially if I over reacting or you disagree.
Is your main worry that they may be planning to dilute in the future thru this shelf? Or did you read any other detail that was worrisome. Im not sure why they would need/want to raise with equity, the net cash position seems relatively safe. I suppose they could be worried about macro headwinds and preparing. Or prepping for more acquisitions. Alternatively an equity raise probably would have been a good for them if share price had remained near 7/share, maybe preparing for that possibility. Idk, what were your thoughts?
Yes, that would be my main concern. Also they mention issuing preferred stock and who knows what rate they would have to offer to entice investors.
Another concern, as you mentioned, would be that they are considering more acquisitions and would use a combination of equity, cash and debt, perhaps via again preferred stock and equity and may over pay.
Since they don’t seem to me to be very shareholder friendly and if you read further they also have some tough anti-takeover provisions this appears to be all one-sided.
I would gladly be proven wrong. The stock is cheap, but as I mentioned in a previous post has never gone anywhere. That doesn’t mean it can’t and perhaps I am not seeing the forest through the trees. There just seems like there are more trees now after the S-3 was issued. I believe it could be why the stock sold back down as well.
My question is why not repurchase shares if the stock is undervalued. That would be a better use of capital if they believe their currently stable of brands are lucrative.
Again, I would appreciate your thoughts and those of others, which may interest me In purchasing at least a small amount of shares. I am not interested in Roach Motels. I’ve had my share of many through the years and patiently still holding a few for years waiting for something to happen.
Yeah I definitely see your point, I also tend to not like equity financing, especially in at low valuations.
Acquisitions also can be good or bad, I need to look into their recent acquisition, did they get a good deal on it? If so it would speak to a company that is an intelligent capital allocator vs one that will overpay. If they picked it up for a great deal it would give me a little more hope that they wouldnt use equity financing in a stupid way. Ill take a look.
As to the stock not going anywhere, it did trade at a market cap of 10m a year ago, and before the sell off (which I assumed could be due to the tariff situation) it looked like it was nearing a 40m valuation, and now sits at 20m. So i am not sure theres no room for this stock to offer returns. I had it back at 10m but was playing more of an event driven thesis with that merger which i hoped would pay a premium. When it broke the shares appreciated and i sold around 20m. Not saying that will happen again but there could still be money to be made. Personally i am holding off but may continue to watch it.
Sorry, I haven’t replied in a few days. It appears that you have a lot more skin in the game than I do regarding this company. I looked a bit further today and noticed they haven’t issued stock since 2011 for whatever that is worth. I am also trying to get a better grip on their brands. Seems like they would be a good fit for Smuckers, if they ever intended to sell.
Nice write up. I have looked and read about this company several times over the years, but it never seems to go anywhere. And I would be concerned about coffee prices going forward. So the hedging is a very big deal. Perhaps there is still one nice puff going forward. Or it could just be a value trap. I hope the former will occur. Thanks. Good work.
Thanks a lot! Yeah, you’ve got a good point. I’m with you on that one.
Same as above - looked at it over the years and always put it in the yeah looks interesting but a lot better opportunities elsewhere rather than take the risk on this
Great idea! Didn't know the company. Perhaps as Margin of Safety states: a value trap? I think could be a perennial net-net.
Thanks for the article. With coffee futures still elevated compared to pre-COVID, how would profitability look with pricing returning to 2019 levels?
I struggle to see their competitive advantage in a normalized environment, although the stock certainly looks cheap on a liquidation basis.
With lower coffee futures, their costs should also come down, so margins shouldn’t be affected too dramatically in the long run. That said, in the short term, there will likely be some impact, as they’ll have to work through older inventory bought at higher prices.
Got it. Thanks for the write up. Will keep an eye on the stock.
You should teach people how to investigate companies for their “investibility!”
Appreciate the kind words, means a lot!
This is great work, very much a Buffett play. Good find!
Thanks a lot, I really appreciate it!
Take a look at the S-3 that was filed on 3-27-2025. Appears to me to be another red flag, plus if you read further, there are anti-takeover provisions, which appear to favor management and not shareholders. Thoughts are welcome, especially if I over reacting or you disagree.
Is your main worry that they may be planning to dilute in the future thru this shelf? Or did you read any other detail that was worrisome. Im not sure why they would need/want to raise with equity, the net cash position seems relatively safe. I suppose they could be worried about macro headwinds and preparing. Or prepping for more acquisitions. Alternatively an equity raise probably would have been a good for them if share price had remained near 7/share, maybe preparing for that possibility. Idk, what were your thoughts?
Yes, that would be my main concern. Also they mention issuing preferred stock and who knows what rate they would have to offer to entice investors.
Another concern, as you mentioned, would be that they are considering more acquisitions and would use a combination of equity, cash and debt, perhaps via again preferred stock and equity and may over pay.
Since they don’t seem to me to be very shareholder friendly and if you read further they also have some tough anti-takeover provisions this appears to be all one-sided.
I would gladly be proven wrong. The stock is cheap, but as I mentioned in a previous post has never gone anywhere. That doesn’t mean it can’t and perhaps I am not seeing the forest through the trees. There just seems like there are more trees now after the S-3 was issued. I believe it could be why the stock sold back down as well.
My question is why not repurchase shares if the stock is undervalued. That would be a better use of capital if they believe their currently stable of brands are lucrative.
Again, I would appreciate your thoughts and those of others, which may interest me In purchasing at least a small amount of shares. I am not interested in Roach Motels. I’ve had my share of many through the years and patiently still holding a few for years waiting for something to happen.
Yeah I definitely see your point, I also tend to not like equity financing, especially in at low valuations.
Acquisitions also can be good or bad, I need to look into their recent acquisition, did they get a good deal on it? If so it would speak to a company that is an intelligent capital allocator vs one that will overpay. If they picked it up for a great deal it would give me a little more hope that they wouldnt use equity financing in a stupid way. Ill take a look.
As to the stock not going anywhere, it did trade at a market cap of 10m a year ago, and before the sell off (which I assumed could be due to the tariff situation) it looked like it was nearing a 40m valuation, and now sits at 20m. So i am not sure theres no room for this stock to offer returns. I had it back at 10m but was playing more of an event driven thesis with that merger which i hoped would pay a premium. When it broke the shares appreciated and i sold around 20m. Not saying that will happen again but there could still be money to be made. Personally i am holding off but may continue to watch it.
Sorry, I haven’t replied in a few days. It appears that you have a lot more skin in the game than I do regarding this company. I looked a bit further today and noticed they haven’t issued stock since 2011 for whatever that is worth. I am also trying to get a better grip on their brands. Seems like they would be a good fit for Smuckers, if they ever intended to sell.
what happened in 2023?