Yes, I saw that, elmatador. I hold pork packers SFD and SEB. Meatpacking seems to be a tough, competitive business where sometimes commodity prices rule and whatever management does, doesn't stop earnings losses.
So I am somewhat confused. JBS comes in and buys struggling USA producers and turns them around. How can they do that? These USA guys or the USA environment so bad that only skillful outside management can turn things around? What did this Brazilian meatpacking company do, that the USA guys didn't and should have? (Just wondering)
Also, I've been a stockholder of a couple of Mexican food companies (tortilla and an egg producer) as well as Brazilian SADA, mentioned in your link.
I believed that these were "just" food companies, and they made their money from farming/processing/selling foodstuffs to consumers. Ha. Very wrong there. They apparently tried to make their profits from financial manipulations. If you were a stockholder last year, you know exactly how quickly and sharply the stocks of these companies crashed when the bad news came out. As this lawsuit says,
"Sadia entered into undisclosed currency derivative contracts to purportedly hedge against the Company's U.S. dollar exposure. The Company characterized the amounts of these contracts as "nominal." However, these contracts violated Company policy in that they were far larger than necessary to hedge normal business operations and resulted in a loss of $365 million." (Again, Sadia was not the only company to do this, and not the only company to have its stock crushed when they had to report very large currency losses.)
My point is that I don't trust that these Brazilian companies are any more competent or successful in coming into a culture that's unfamiliar to them and managing troubled businesses than the nationals (USA people) who are already in there, struggling.
Otoh, though, analysts and some media people believe the Brazilian beverage company that bought Budweiser will do very well with the acquisition-- Bud having grown fat and lazy with its dominant position.
In any case, I've been burned so I'm sticking to USA food producers for commodity foods like beef/pork/chicken. For brand food - like Nestle, Cadbury, Pepsi, Fomento Económico Mexicano, that's a different story, and I take a more international outlook. |
