ALEXANDRIA, VA (Dec. 11, 1997) -- Because we have been looking at food companies for more than a month now, the time has come to re-emphasize what exactly we are looking for here in the Drip Portfolio.
Roughly a month ago, Jeff and I announced that we would begin to look for a "food" investment for the Drip Portfolio. The idea of consistent revenue growth, big cash flow and some nice dividend income intrigued us. By "food," what we meant was any branded, packaged, consumer product that people consume. Thus in our initial list we included beverages.
To date, we have examined:
Campbell Soup (NYSE: CPB)
Coca-Cola (NYSE: KO)
ConAgra (NYSE: CAG)
CPC International (NYSE: CPC)
Flowers Industries (NYSE: FLO)
General Mills (NYSE: GIS)
Grand Met (NYSE: GRM)
Heinz (NYSE: HNZ)
Hershey Foods (NYSE: HSY
International Bakeries (NYSE: IBC)
Kellogg (NYSE: K)
Nestle (OTC: NSRGY)
We are about half way through evaluating each individual company. For Jeff's companies, he has been taking a gander and deciding if they make the final round. For me, I have been taking a gander and waiting until we get them all lined up side by side. The way I think about things emphasizes the overall context, whereas Jeff is more of a stock by stock kinda guy. We probably will come out with the same answer but it is just a different appoach.
Many of you have written asking why we are not covering certain companies. Most of these neglected companies fall into three categories: they make food components, they are foreign companies or food is not a majority of their revenues. I will try to explain why we are not looking at these companies.
Food component makers are companies that are in the food business, but they only do non-branded commodity products, like Archer Daniels Midland (NYSE: ADM). Although these are fine businesses, we don't want to invest in a non-branded food business at this time.
International companies, although we have looked at two, are in my opinion just too much of a pain to deal with. Semi-annual reporting, incomplete financial statements until the end of the year and poor communication with shareholders all bug me. Yes, there is some information on these companies available. However, compared to the good ol' American disclosure requirements, they look weak and sissified by comparison.
As for companies where food is not a majority of the revenues, well, there is not much to explain. Yes, Unilever (a foreign company to boot) and Procter & Gamble are great companies. But we will not be looking at them in this pass. Perhaps if we go to look for a consumer products company, we will look at Proctor & Gamble along with all of the other companies that make trash bags and cleaning products.
When we finish looking at these companies individually, we will then start to compile all of the numbers and find out which ones stand out. Hopefully, we will finish this by the end of the month and make a decision one way or the other about the food companies in time for the new year. We aim to find an investment that will offer immediate attraction and extraordinary twenty-year possibilities.
Day Month Year History Drip (1.80%) (3.12%) (13.42%) (13.42%) S&P 500 (1.53%) (0.05%) 28.92% 0.38% Nasdaq (2.38%) (2.62%) 20.72% (2.21%) Last Rec'd Total # Security In At Current 11/03/97 4.835 INTC $81.623 $71.813 11/14/97 1.000 JNJ $62.125 $65.188 Last Rec'd Total # Security In At Value Change 11/03/97 4.835 INTC $394.69 $347.25 ($47.44) 11/14/97 1.000 JNJ $62.13 $65.19 $3.06 Base: $900.00 Cash: $389.75** Total: $802.19 GOAL: The portfolio began with $500 on July 28, 1997, adds $100 on the 15th of every month, and the goal is to grow the port to $150,000 by August of the year 2017. **Transactions in progress: 11/24/97: $100 sent to purchase more Intel. The Drip Portfolio has been divided into