08-09-2019, 09:36 AM
Here's Chowder's comment this morning on KHC.
Chowder, Contributor
Comments18734 | Following
Author’s reply »
Recently we have had quite a conversation about KHC. At one time KHC was a good investment, an investment with such investment potential that even Warren Buffet took up a huge position.
My position in KHC was up over 100% when I decided to sell half of it to pay for a trip to London with the family and build a new multi-level deck. (My timing was pure luck, I had no idea at the time that KHC was about to fall.) But, as I and many others have said many times, you need to monitor your companies in the event they start performing poorly. This is why I keep up with earnings reports. When you see quarter after quarter after quarter of declining revenues and cash flows, you know your company is in trouble. This is why I suggest that people do not keep building positions on companies in the red. Wait until they turn green for you. There's no need to keep averaging down into losers.
KHC is now down 70% from its peak price a couple of years ago, and once it turned into the red, I no longer added to KHC and in fact, started selling off shares. When I see the dividend is unsafe, and KHC's dividend is unsafe, I no longer care about product lines, market share, or any other advantage one might think KHC has.
I pay attention to what analysts say when talking about the business. I ignore their buy, sell or hold ratings, it's their analysis of what's going on in the business that matters to me and has saved me from most dividend cuts.
This is just the latest of reports that came out today.
Kraft Heinz (NASDAQ:KHC) falls 2.6% in premarket trading after Guggenheim analyst Laurent Grandet downgrades the stock to sell from neutral following the food company's disappointing H1 results.
Sees potential for more "bad news" as the new CEO attempts a turnaround, noting the company's "precarious situation" due to high debt burden, brands in need of heavy investment, and cash flow that's "insufficient to fund all those urgencies concurrently."
In the past six months KHC fell 35% vs. consumer staples sector median performance of 0%.
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There you have it ...high debt burden, in need of heavy investment, and cash flow that's INSUFFICIENT to fund all those urgencies. ... What's that tell you about the dividend?
People, when market/company conditions change, we need to change our view on how we used to look at a company. If KHC ever gets their act together, you can always buy back in at a later date. Meanwhile, use your funds to buy quality companies or add to the ones doing well for you. It's as simple as that. Why complicate things?
Chowder, Contributor
Comments18734 | Following
Author’s reply »
Recently we have had quite a conversation about KHC. At one time KHC was a good investment, an investment with such investment potential that even Warren Buffet took up a huge position.
My position in KHC was up over 100% when I decided to sell half of it to pay for a trip to London with the family and build a new multi-level deck. (My timing was pure luck, I had no idea at the time that KHC was about to fall.) But, as I and many others have said many times, you need to monitor your companies in the event they start performing poorly. This is why I keep up with earnings reports. When you see quarter after quarter after quarter of declining revenues and cash flows, you know your company is in trouble. This is why I suggest that people do not keep building positions on companies in the red. Wait until they turn green for you. There's no need to keep averaging down into losers.
KHC is now down 70% from its peak price a couple of years ago, and once it turned into the red, I no longer added to KHC and in fact, started selling off shares. When I see the dividend is unsafe, and KHC's dividend is unsafe, I no longer care about product lines, market share, or any other advantage one might think KHC has.
I pay attention to what analysts say when talking about the business. I ignore their buy, sell or hold ratings, it's their analysis of what's going on in the business that matters to me and has saved me from most dividend cuts.
This is just the latest of reports that came out today.
Kraft Heinz (NASDAQ:KHC) falls 2.6% in premarket trading after Guggenheim analyst Laurent Grandet downgrades the stock to sell from neutral following the food company's disappointing H1 results.
Sees potential for more "bad news" as the new CEO attempts a turnaround, noting the company's "precarious situation" due to high debt burden, brands in need of heavy investment, and cash flow that's "insufficient to fund all those urgencies concurrently."
In the past six months KHC fell 35% vs. consumer staples sector median performance of 0%.
---------
There you have it ...high debt burden, in need of heavy investment, and cash flow that's INSUFFICIENT to fund all those urgencies. ... What's that tell you about the dividend?
People, when market/company conditions change, we need to change our view on how we used to look at a company. If KHC ever gets their act together, you can always buy back in at a later date. Meanwhile, use your funds to buy quality companies or add to the ones doing well for you. It's as simple as that. Why complicate things?