No. of Recommendations: 8
Hershey is a good buy here. So simple. Brands embedded in American brains.
Cheaper than normal, due to market concerns that two million years of human evolution* could be reversed with recent advances in drugs. I seriously doubt that but haven’t studied the drugs but imagine there is the typical hype. I believe the drugs are expensive and I don’t see large percentages of humans maintaining the discipline to avoid the types of products Hershey sells, over long periods of time.
As an investment, the combination of very long term predictability in volumes and inflation protected earnings is attractive.
I might buy some with a little bit of research. It’s the sort of business I could see myself adding to, if there was a general market decline and it got even more attractive and critically holding until death do us part. Also might not fall as much as the general market in a crash**. Hershey certainly looks safer than the general market. Not much changes in this business over the decades.
Hershey v versus Berkshire is interesting…Berkshire generally not as predictable. Berkshire trying to reinvest all capital. Hershey paying dividends. Berkshire diversified.
Any observations on how shareholder friendly current management are? Any concerns around things like management compensation. Capital allocation. Restructuring. Operating execution?
* "Humans are evolutionarily wired to prefer fatty and sweet tastes because they are a very efficient source of energy, and our bodies are wired for survival," says Lisa Cimperman, dietitian at University Hospitals Case Medical Center.
** not much sign of a crash in US equities over the next 12 to 18 months with inflation moderating, and an election coming. However, plenty of reasons for concerns about market prices over a longer term horizon (wage genie out of the bottle. Trillions in crypto vapour assets that could disappear at any moment. Trillions in commercial real estate debt that could become a problem. Trillions in corporate debt. All with the potential to create a dangerous cocktail of extreme leverage, higher rates for longer and at some point a return of fear. Geopolitical. Plus risks I’m not aware of. The general dangerous consensus that everything is rosy in the garden is always a worry.)
