Value 3.0 – 2019 Gabelli Annual Meeting

Kevin Dreyer’s presentation from the 2019 Gabelli Annual Meeting, titled, Value 3.0.

Kevin Dreyer: Value 3.0 – 2019 Gabelli Annual Meeting (Part 2)

Transcript

I’m Kevin Dreyer, co-CIO of the value team here at Gabelli and I’d like to just maybe dispel this notion that the growth and value are in conflict with each other. And I have what’s not a new quote at all. That growth is always a component in the calculation of value considering a variable whose importance can range from negligible to enormous and whose impact can be positive as well as negative. And who said that that was this guy Warren Buffett. So we’ve been looking at growth as a component of value forever really. And there are many areas within our circle of competence that have a lot of growth behind them. You’ve heard many of these before. Health and wellness for one within the food and beverage industry payments fintech. You’re gonna hear more about that later.

Music and live entertainment is is one electric and autonomous vehicles certainly something of interest. 5G and infrastructure these are all growth areas in the economy and we have a lot of investments that play into them. So maybe start with one of my favorite topics health and wellness. There are a lot of trends out there driving this. Consumers want to eat better live better or live longer. And we see within diets people looking for high protein plant based nutrition in particular non gmo know Franken foods sometimes certain specific diets like paleo and low carb and then probiotics which go in yogurts as well as a lot of other other sorts of foods. There are also occasions that are growing and this might seem a little bit in conflict with health and wellness but snacking in particular people eating between meals as opposed to sitting down for three large meals per day and also forms of foods frozen food in particular is one that I’ll touch on. But first I want to talk about plant based nutrition because well it’s quite in the news lately you’ll see on on the one side there we have the beyond burger to your left which just went public two weeks ago at twenty five dollars per share. It touched ninety six yesterday.

For those unfamiliar the beyond Burger is a plant based meat made from pea protein that looks kind of like a burger Cook’s kind of like a burger and tastes kind of like a burger. It’s its current market value is about 5 billion which is pretty good for a company that did a little under a hundred million in sales last year and loses money. But nonetheless growing very rapidly a lot of interest a lot of celebrity endorsers as well as investors in that company on the right is the impossible burger they supply. Burger King currently with a similar product. Again it’s a fresh plant based burger. They’re gonna be coming out with a consumer offering probably pretty shortly as well so these are getting a lot of headlines but they’re not the only games in town in this. So there are a lot of plant based protein options that are out there from other established food companies for instance Guardian which is owned by ConAgra Boca has been around for a long time. That’s owned by Kraft. They haven’t really invested that much behind it lately. Light life is a brand that’s actually pretty similar to those other to impossible and beyond that’s owned by our friends in the Great North Maple Leaf Foods and then Morningstar Farms which is owned by Kellogg’s. So a lot of bigger food companies are already in this space.

Others we know are coming. Nestle has said they’re going to come out with the incredible burger. Tyson has said they’re going to have something similar so we’re going to see a lot more innovation just as Netflix spurred on Disney and others to innovate and have better consumer offerings. We think you’re going to see some things from these folks as well. Now when I said Frozen is a growing occasion a growing form of food that might surprise some of you because I dunno about you but for me up until a few years ago the last frozen meal I had looked pretty much like this hadn’t changed that much in let’s call it 40 50 years. But in the last several years the category has really been reinvented primarily by by one company in particular and that’s ConAgra Brands. And they did it CEO Sean Connolly who before ran Hill Shire pretty much the same playbook better ingredients better quality better packaging and better marketing really has led to a resurgence of that category it’s 50 billion dollars as a category it’s growing mid single digits. So what do they have out there.




About the Author

Jacob Wolinsky
Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Prior to ValueWalk, Jacob was VP of Business Development at SumZero. Prior to SumZero, Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver