KHC

[stockguru]

Anyone own it? Down $9 after hours.

Accounting issues and cut the dividend by 36%

Not good.

[vbin]

I own it. One my my worst investments so far other than GE.

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[ChadR]

Glad that I don't own it. Accounting issues scare me away from a stock. I had them on my watch list, but they're gone now.

[fenders53]

Owned 200 shares. Sold 100 last Friday because I don't trust them and was worried about earnings. Sold a call against the other 100. I got it half right

[peachday]

Shit, it's going to hurt bad. I've own KHC since 2013 and it's nearly 10% of my portfolio. I normally don't build up a position past 3% but I got some spare cash and thought of parking in KHC temporary thinking it's a safe place so I doubled down a few times. Worst investment ever.
My portfolio is very diversified most of the time but every now and then I got greedy due to low valuation, high dividend and got hit with a brick. KHC is the second one after T...

[crimsonghost747]

Never owned it but I've been looking at it several times. I wouldn't be too worries about the SEC subpoena, those things are handed out quite often, it always scares investors away but usually nothing comes out of it. Of course you never know if this time there is something super dodgy that they will find.

What I don't understand is a 15 BILLION USD write-down. That is simply not acceptable, you don't just wake up one day and realize that your assets are 15 billion less than you thought.

[fenders53]

(02-21-2019, 09:14 PM)crimsonghost747 Wrote: Never owned it but I've been looking at it several times. I wouldn't be too worries about the SEC subpoena, those things are handed out quite often, it always scares investors away but usually nothing comes out of it. Of course you never know if this time there is something super dodgy that they will find.

What I don't understand is a 15 BILLION USD write-down. That is simply not acceptable, you don't just wake up one day and realize that your assets are 15 billion less than you thought.

Agreed, the balance sheet shenanigans smell bad with the info we have now.  So many have continued to hold it against their better judgement this past year, and justified it with the hope the high Div would make it all work out somehow.  Myself included.  That is the lesson in this.  I'm lucky I didn't get in a year earlier.  I got in with puts and sold calls on the way down.  Still lost plenty anyhow.  Doubt I even calculate it because I understand what I did wrong.  If I hold enough of these high yielders I am going to get burnt now and then.  Pretty sure this stock will be deep in the 30s quick.  When you lose trust it's game over for a very long time.  Some will jump in on the "smoking good deal" this week and wonder why the market won't allow it to rise for a long time other than dead cat bounces.  Investors that get burned have long memories.          

The important decision for current investors here is whether to cut losses or be patient.  I'll define patience as a years long wait to maybe get back to even.  I usually look for a good time to exit when Divs get cut because my patience has generally been punished with much more pain from the stock.  The stock evaluation has to start over.

[Otter]

Thankful this one is only 0.21% of my dividend income stream (after the dividend cut). I don't view this one as an opportunity to average down. As crimsonghost says, a write-down of this magnitude speaks to serious financial malfeasance at the top levels of the company.

[fenders53]

Completely agree. Time wil tell if this may well be a good entry point for a new KHC investor. I surely wouldn't start averaging down a position I started at twice the price. KHC has fleas for the foreseeable future. Today is not a market over-reaction to a minor problem. It's the market adjusting to reality.

[Binary]

Uhh, I was close to buying it a year ago...
Now it presents a good opportunity for similar names, look at SJM or GIS down today, but there are more examples.

[Otter]

Having lost all confidence in management, I decided to cut my losses and exit my KHC position entirely. Paired the loss with a sale/gain on LLY, then added to ADM and initiated a new position in GD. Overall portfolio income is roughly the same as what it was before the KHC cut, and the quality/risk profile of the overall portfolio feels better.

This leaves GIS on my "DGI holdings that aren't living up to expectations" list.

[fenders53]

(02-22-2019, 11:30 AM)Otter Wrote: Having lost all confidence in management......

That is all an experienced investor such as yourself needs to say to justify moving on IMO.  I still own shares and may sell covered calls for awhile and see if I can salvage this position to some degree.  Don't lock the door behind you because I may need to get out quick Otter.     The biggest problem is KHC sells ketchup and cheezy macaroni.  There is just no way to grow their way out of this in a reasonable amount of time.  It's a tough spot if they were well managed.  They cut the Div to deleverage.  That kinda leaves out a meaningful acquisition.  I bet I am down 20 points on this minus the option premiums collected, so call it down 15.  I was down worse on AAPL and MO, but KHC is nothing like those stocks anytime reasonably soon.