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Strategies & Market Trends : Value Investing

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richardred

To: Paul Senior who wrote (59645)	9/20/2017 8:11:09 PM
From: E_K_S	1 Recommendation Read Replies (3) of 78705

B&G Foods, Inc. (BGS) - a 25% add to current position 6.2% div now at my Buy @ $29.55/share Seneca Foods Corporation (SENEA) - have 30% shares up for sale at/above $32/share I continue to build my AG/Food stocks. I am seeing value in these names based on FCF and forward PE's. More importantly I think food deflation may end as I am seeing first signs of AG input (UAN fertilizer) prices rising after hitting a two year bottom. If this is true for other AG products (ie canned & frozen foods), my premise is that retail prices may/could happen in next 8-12 months and efficient producers/manufactures/distributors may see expanding margins. The deep value play is SENEA which is 40% undervalued according to the Graham Number valuation model. It is +14% from your recent Buy that led me to this name. I basically did a pair trade of SENEA (the value Buy) and BGS (the turnaround FCF play). BGS now at multi year lows and SENEA moving higher off it's recent 52wk low. The idea is to peel off some shares of SENEA (very thinly traded) to Buy BGS as it sells at new lows. I still own Dean Foods (DF) but have not added from my original Buy. DF is only 3% undervalued according to the GN valuation model so will do another Buy at/below $9.25/share. I like their assets but milk/dairy is still in a food deflation environment. One can eat so much ice cream which is their only growing high margin division (represents about 15% of their business). SENEA may/could be a take over candidate just for their food processing assets. They also have a recent acquisition in frozen vegetables w/ the Jolly Green Giant partner/acquisition. Therefore, I really do not want to sell many of these shares when they are still so undervalued. As I book profits from other sectors, I may use those proceeds to build my AG/food stocks. I also like the farm/land REITs and ADM (waiting for a sell off on this one). After many years of holding fertilizer company shares UAN, stock +35% in the last few days on 15% increase in urea prices. At the peak of the UAN cycle, this was a $19/share stock and paid a 6% variable distribution. EKS

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