We sold out of Impapala Platinum and had some success. Platinum is rarer than gold yet has traded at a large discount for quite some time. We first purchased in 2016. We sold half of the position a few years ago for almost 100% profit and recently sold the second half of the position for about a 30% profit. Impala was a higher risk/higher return stock. Orkla was a holding that we held for over four years.
Orkla is the Kraft/ Heinz of Norway, specializing in frozen food, cheese, crackers, pizza, and many other grocery store items. The irony is that we originally bought the stock because Orkla reminded us of Kraft and then we sold it after Kraft began having problems.
The food business is very competitive and retailers have the upper hand for now. Amazon and the dollar stores are shaking things up and putting pressure on profits of the big food manufacturers. Orkla’s main shareholder stated that he was worried about the future and the company’s CEO recently stepped down.
When a CEO steps down and he/she is in their early 50s, it’s usually not for a good reason. Sure, they’ll tell you that they need to take time off but usually they can see the handwriting on the wall.
Most of our accounts made a small profit on Orkla, as the dividend yield was north of 5% for much of the time that we owed the stock.
We briefly owned Signet. Signet is a jewelry store with retail brands such as Piercing Pagoda, Zales, and Kay’s. We thought the company would have a hard time competing with the online retailers but bought shares after a huge earnings miss. We hoped for a rebound but when this didn’t happen, we cut our losses and moved on.
Our next purchase was Dean Foods, the largest dairy company in the U.S. Dean’s stock has done quite poorly as milk sales have witnessed high competition from plantbased products such as almond milk. Dean doesn't have much of an organic presence and sold off its White Wave Division to Groupe Danone, the French foods company that owns Danon Yogurt, for $5 billion a few years ago. This may be one of the dumbest moves a management team has ever made as Whitewave is doing quite
well for Danone and could have helped Dean with plant based milk and organics.
This is a higher risk/ higher return stock. We looked at the real estate that Dean owns around the country and think the stock is undervalued. Dean owns entire city blocks in Honolulu, Houston, Miami, Los Angeles, and other expensive property markets. Another company needs to step in and buyout Dean.
If things don’t turn around, we’re tempted to launch a proxy fight. This is when an investor has their own slate of directors whom they want to elect to the board.
Our beloved Dollar General is getting close to doubling its value from when we bought it two years ago. Management keeps opening stores all across the country. Dollar Tree hasn’t done so well for us but we’re optimistic. Its Family Dollar division is going to sell alcohol and Dollar Tree is going to sell items for more than $1. As long as the two companies continue opening stores, we’ll remain shareholders. Remember, when a retailer stops opening stores, it’s time to sell. At that point, store upkeep outpaces growth in income.