Monday, April 14, 2008

Why did you buy that stock ? [Goodman Fielder]

To be honest I bought Goodman Fielder[GFF] because I noticed just about everything I shoved in my fat mouth was made by the company.

Everything from Vogel's bread, Olivani olive spread Tararua milk and cheese products and a whole range of food for breakfast lunch and dinner.

I thought before buying, that this company has a huge clutch of branded, staple, food products that New Zealanders and Australians have grown up with and people simply keep buying them!

What more could you want from a business?

That is pretty much the the main reason why I bought the company. Goodman's dominant brands give it the "economic moat" advantage that Warren Buffett talks incessantly about and the fact that the company, what it sells and how it functions, is very easy to understand, puts it above other more complicated industries, whose balance sheets are only decipherable by specialist forensic accountants with xray vision.

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Discuss Goodman Fielder at Share Investor Forum

Goodman's competitive advantage over its competition lies in its ability to leverage off those strong brands, excel during good economic times and plod boringly through the tough years, as we are having now-we all have to eat and that will never change.

Going back to Buffett again, he has a massive holding in Kraft Foods[KFT], a company similar in its branded food focus to Goodman Fielder, but alot bigger of course and he has been adding to his holding over the last year as the stock price tumbles.

Would I buy the stock again today? of course, I still hold it and have done for around 4 years and have been adding to my portfolio over the last few months.

The only crimp for the short to medium term are commodity prices like wheat and raw dairy ingredients, which add to retail product cost but are not always able to be passed on to the consumer.

Related Share Investor reading

Goodman Fielder hit by high commodity prices
Goodman Fielder a Hedge against an economic slump
Goodman Fielder pie gets bigger

Related reading

Kraft good in a recession -Everything Warren Buffett
Goodman Fielder - Corporate Website

c Share Investor 2008

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