# Kraft Heinz (KHC)



## Just a Guy (Mar 27, 2012)

Been waiting for someone to mention this stock...but there’s nothing. 

Stock got hammered, dividend cut, scandals galore, lawsuits...yet silence. 

They produce a lot of food, stock drop means the dividend payout is still close to 5% even with the cut...the stock is on sale, yet silence.


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## l1quidfinance (Mar 17, 2017)

It has caught my eye for sure and I keep meaning to dig deeper but it does look cheap now.


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## fatcat (Nov 11, 2009)

i had them for awhile and got out last year

i like food staples and have had unilever (which is partly food and partly household) mainly for its international exposure for awhile 

but food staples are going sideways, the general conclusion being that grocery tastes are changing and old line food companies are kind of stale

i got back in again a few months back and then got out again with a small loss

i also sold my berkshire, who as you know, owns a large chunk of kraft

this is a stock that appeals to old men who remember velveeta cheese with great fondness


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## kcowan (Jul 1, 2010)

fatcat said:


> this is a stock that appeals to old men who remember velveeta cheese with great fondness


I thought it was KD and ketchup!


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## fatcat (Nov 11, 2009)

kcowan said:


> I thought it was KD and ketchup!


also very good ... wish the stock was equally delicious


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## Just a Guy (Mar 27, 2012)

So, Kraft and Heinz are everywhere, they made McDonald’s blink and start carrying their ketchup (McDonald’s had their own brand for years because Heinz requires cobranding and McDonald’s didn’t want to). Kraft is probably Canada’s number one brand of cheese...and you think they stink? They own the top brands in a number of categories, not to mention several other brands. Here are few you may recognize...not even a complete list.


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## doctrine (Sep 30, 2011)

KHZ took a writedown of $15 billion in their last report, or $10.34 a share. That is pretty crazy. *poof*. While non-cash, it is an indication of a material reduction in their brand power that has resulted in weakness in pricing power. 

The balance sheet has $52 billion of equity, which means the company now trades at a 20% discount to book. However, there is $36 billion of goodwill still left. There is $50 billion in intangibles beyond that. The company has negative tangible book value.

Brands are unfortunately off trend. Premium pricing now comes from local and organic food, not brand-name. This is showing up in their decreasing margins.

Certainly there is value though. The trick is to value in the new reality, not the reality of even 5 years ago.


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## jargey3000 (Jan 25, 2011)

what's the big deal about "local" food anyway?
Ill take a nice FLORIDA orange over one grown "locally" in NL!!!!
being funny here...but get my point...why is LOCAL necessarily better???
and dont get me started on "Sustainable"!!!


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## birdman (Feb 12, 2013)

Maybe its Karma for closing their Ketchup plant in Ontario. We only buy French's now.


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## Just a Guy (Mar 27, 2012)

The write down has already be accounted for and they dropped more than $10/share. The company can’t afford two down quarters in a row, so will probably do everything in their power to fix things to look good next quarter. They probably wrote down everything they had to in one big chunk, take the pill and swallow. 

As for a negative book value, that’s not likely with all their brands. Which are still popular, despite the organic craze of overpaying. Take a look at their brands, true some are probably on the downswing, but others are just fine and still market leaders.


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## fatcat (Nov 11, 2009)

Just a Guy said:


> The write down has already be accounted for and they dropped more than $10/share. The company can’t afford two down quarters in a row, so will probably do everything in their power to fix things to look good next quarter. They probably wrote down everything they had to in one big chunk, take the pill and swallow.
> 
> As for a negative book value, that’s not likely with all their brands. Which are still popular, despite the organic craze of overpaying. Take a look at their brands, true some are probably on the downswing, but others are just fine and still market leaders.


i sold right after the precipitous drop and took a loss and won’t go back, like you, i looked at their brand list which is a nostalgia journey but the market has deeply negative sentiment to old line food companies, so enthralled are they by millennials who apparently have abandoned the kraft dinner of their youth and moved up to annies pasta (which was bought by general mills) many of the big food companies are going sideways ... KO, Nestle, Unilever

i would have thought kraft among others could buy their way into millennial brands but the problem is that millennials tastes are finicky and fluid and its hard to know what to buy


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## Just a Guy (Mar 27, 2012)

From reading the metrics of the stock, you probably shouldn’t have bought the company when you did...the market, as a whole, tends to be very overpriced. The fact that you got burned, has nothing to do with the current stock price which seems to be much more reasonable. You can’t say it’s a bad stock because you overpaid in the past.


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## fatcat (Nov 11, 2009)

Just a Guy said:


> From reading the metrics of the stock, you probably shouldn’t have bought the company when you did...the market, as a whole, tends to be very overpriced. The fact that you got burned, has nothing to do with the current stock price which seems to be much more reasonable. You can’t say it’s a bad stock because you overpaid in the past.


fair enough, i made a bad buy (only once because i held before and sold for a profit last year and then decided to buy again) and i won’t repeat my mistake ...


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## Just a Guy (Mar 27, 2012)

So you’re saying you’ll make a new one instead.


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## fatcat (Nov 11, 2009)

Just a Guy said:


> So you’re saying you’ll make a new one instead.


almost certainly...


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## Just a Guy (Mar 27, 2012)

Sadly buy high, sell low is a very common investing strategy. You’re certainly not alone in it. I prefer the value investor strategy of buy when other flee. It tends to work out a lot better for me at least.


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## fatcat (Nov 11, 2009)

Just a Guy said:


> Sadly buy high, sell low is a very common investing strategy. You’re certainly not alone in it. I prefer the value investor strategy of buy when other flee. It tends to work out a lot better for me at least.


this is so goddamn funny ... and i thought i was a pompous gasbag ...


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## Just a Guy (Mar 27, 2012)

Did I misrepresent what you said?


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## fatcat (Nov 11, 2009)

Just a Guy said:


> Did I misrepresent what you said?


no, not really, you merely insulted me and i returned the insult ...


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## Just a Guy (Mar 27, 2012)

Maybe, by pointing out what you we’re doing, I hoped you’d reconsider your strategy. Sometimes you need to be blunt with people. You seem to have missed the subtle hint earlier. 

Either way, no insult was intended on my part.


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## Eder (Feb 16, 2011)

Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it.[/url]


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## fatcat (Nov 11, 2009)

Just a Guy said:


> Maybe, by pointing out what you we’re doing, I hoped you’d reconsider your strategy. Sometimes you need to be blunt with people. You seem to have missed the subtle hint earlier.
> 
> Either way, no insult was intended on my part.


fair enough, i apologize as well, believe me, buying high and selling low is not part of any strategy ... i do make mistakes though

i had owned KHC before and done ok and sold it and then bought again as part of an allocation to the consumer staples sector, when it dropped precipitously along with the sec investigation and brand writedown along with the debt load and just the general fact that this is a category really out of favour i realized it just wasn’t a company i wanted to own anymore and so i sold

this is a center aisle company in an investing world that is infatuated with the perimeters and so i guess i just want to pass since i am not young enough to understand the perimeters very well

you may find it a better buy at current prices


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## Just a Guy (Mar 27, 2012)

New CEO appointed today for the company.


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## Just a Guy (Mar 27, 2012)

Well, they beat their expectations and had a 12-13% jump today. Up to around $32 from a low a while back of about $25. Still not out of trouble, but a company that isn’t going anywhere.


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