Will you act like the Fed?


In April ’21, I read Conagra’s earnings call (CAG), & saw “inflation” 33 x and “accelerating” 9 x

CPI was 2.6%

6 mths prior, “inflation” appeared 4 x

zero “accelerating”

And other food producers like Tyson (TSN)?

same trend

What about YUM (Pizza Hut, KFC) ?

they buy the animals that TSN “processes”?


Kroger’s April call mentioned “inflation” once – guidance

I was puzzled

But TSN explained it well:

“a substantial portion of our business is contracted on a fixed annual price basis”

“Yes, we’re hedging, but those hedges roll”

“There are some areas of fairly significant inflation in the back half”

“We can’t eat all the inflation we’re experiencing now”

Got it

I refreshed my spreadsheets of input prices

read some economist reports & FOMC minutes

where the Fed said,

“this is an extraordinarily unusual time, & we really don’t have a template”


so they’ve got no idea

I concluded this was going to be worse than imagined

Because if these folk were listening to companies,

it was YUM not TSN

I had no special insight,

I was simply LISTENING to what those on the ground were saying

ANALYSING my spreadsheets


It was like an earthquake had occurred offshore

triggering a wave

which was rolling through the ocean

but only the fishermen spotted the ripple & knew something was up.

I was a stock picker, all I wanted to know was:

Who is this good for, & who is it going to hurt?

I discussed “inflation” with clients & advisors

even wrote about it

but got pushback

Understandable – the developed world hadn’t seen inflation in nearly 40yrs

The sea looked calm from the beach

and why gaze at the horizon when you’re having fun building sandcastles?

Besides, the Fed’s in the lifeguard chair

Although, no one thought the “bright sun” (aka debt in the system)

might make the “lifeguard” look away

What about investors?

Well, Value beat Growth last year

Only by a “ripple”

but in the 15 trading days so far,

World -6.3%
Quality – 9.5%
Growth – 11%

And Value?

-1.7% (some funds are up 😉)

Of course us Value guys have noticed

but we’re alone at sea

And those with refreshed excel sheets too.

But few are LISTENING

Maybe they’re still building sandcastles?

Maybe others are “looking away” because their clients have so much

Growth & Quality “in their systems”?

Others will only notice this “wave” in the Jan fact sheets

sent in Feb

that’s if they’re still subscribed to Value fact sheets after 10 yrs

Clients will find out in Q1 report backs

when, May?

But like the Fed,

most won’t act until too late.

Some will call Value’s outperformance


and wait another quarter

or two

By which time

The wave may have rolled in

destroying those sandcastles

and “moats”

and “systems”

If you have an OPEN MIND & are THINKING about VALUE

do get in touch