Thursday, January 12, 2012

Is Goodman Fielder a Takeover Prospect?

http://chart.bigcharts.com/custom/fairfax-com-nz/chart.asp?rnd=0.7323057377352515&style=2242&symb=GFF&size=1&type=64&time=6yr&freq=1dy&comp=&compidx=&ma=&maval=&lf=268435456&lf2=&lf3=&uf=16384&arrowdates=&arrowlegend=&country=NZ&sid=2174916
Above is the Goodman Fielder Ltd [GFF.NZX] 6 year chart. Quite frankly it looks like the trajectory of a kamikaze pilot on speed and in fact it shares similar traits with its management - it seems destined to want to destroy the company that it manages.

I have crapped on over many years about this company and how boring it is but how it is a solid company that will do OK in hard times and better in the good times. Well it is but poor management have been unable to steer it through tough economic times.

I also said that its value remains in its core group of brands that Australasians love to eat everyday and that is still the case.

I think that at a share price of 54c - 10% of a loaf of their vogels bread - those brands have been undervalued after investors have completely discounted any value and faith they have in management.

In my last look at GFF back in August 2011 its shares were trading at 91c and I thought they had further to fall but a loss since then of around 40% seems a little overdone to me.

There is value in the company with these brands and I believe that it is a takeover prospect given its relative cheapness and dominance in various sectors of the supermarket shelf.

It is a risky investment, even at these prices, because the share price could fall further but I think Goodman Fielder is a good fit for the right company. Even GFF think so because they are going to sell off parts of the business that don't fit its core brands and we can be rest assured anyone else will do a far better job.

Be patient and wait for some bad macro news to drop the share price a bit.

Goodman Fielder @ Share Investor

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c Share Investor 2012