Tuesday, May 02, 2006

Stock market bulls are coming out the gate.

From 30+ very successful years in the investing game I think a bull market is beginning in tandem with the end of the housing price runup. Given the global energy shortages and Americans in hock up to their eyeballs, the big winners are the integrated oils and the money center banks.

Heinz is clearly in play. Up 25% year to date. Think my shareholder proposal last year recommending the company sell itself played a role. As I anticipated, there is a deep pocket private equity firm interested.

Got 6% of the Heinz vote suggesting I might have picked up at least a quarter of the small shareholder vote. Given the highly political nature of the proposal, augers well for getting their votes in a presidential race. Institutions usually vote the straight management ticket.

Business news briefs: 9/28/04
Tuesday, September 28, 2004
Pittsburgh Post-Gazette

Investor pushes Heinz sale

California investor Mark Klein wants H.J. Heinz Co. shareholders to vote next year on a proposal that the ketchup company hire an investment bank to explore a sale to maximize shareholder value. In response, the company asked that shareholder submissions for the September 2005 annual meeting be made between December and March.

PROPOSAL: The shareholders recommend Heinz hire an investment bank to explore the sale of the company.

The GOLD STANDARD test of investment return is PURCHASING POWER with respect to the most sought after consumer goods and services, e.g. housing and education. In recent years Heinz share values failed that test.

Since 1999, Heinz’s nominal share price, unadjusted for the Del Monte transaction, decreased about 27%. On January 1, 1999 Heinz share price was $51.24 The closing price on December 3, 2004 when this proposal was completed was $36.43.

Contrast Heinz share price history in the 1999 to 2004 period with Harvard’s undergraduate tuition which rose about 24.5% from $21,342to $27,448. Purchasing power-wise Heinz shares also declined significantly over the same period with respect to homeownership. National median home price rose 37%, and in very desirable cities like San Diego over 100%.

In my opinion the principle driving force for such severely escalating prices is feminist careerism which vastly expanded the fulltime workforce without an increase in REAL WAGES. The BUYING POWER of earnings halved since the 1970s because most families today need two incomes to almost equal the buying power one had 30 years ago. Put another way most women working fulltime essentially work for nothing.

Busy, overworked parents have little time to nurture and protect their marriages. Hence more competition for scarce housing from today’s 50% divorce rate, and from young adults now so skeptical of the durability of a loving commitment they marry late, or not at all.

Just Economics 101 supply and demand theory: Too much consumer demand chasing scarce commodities like private undergraduate education and homeownership.

In my opinion the collapse in Heinz shares’ BUYING POWER is greatly magnified by the exploding obesity driven childhood and adult diabetes epidemic. A reflection of the extent of the current epidemic is diabetic home blood test kit suppliers are amongst the leading advertisers on Fox News.

In most families today with both parents working fulltime too few adults and children eat nutritious, portion controlled home cooked meals. Restaurant meals, “t.v.” dinners, and takeout usually contain excessive carbohydrate and fat calories, and very little protein. To reverse the epidemic more mothers need to be at home to prepare nutritious balanced meals, and supervise the children’s snacking.

I believe within a generation at least half the population will become diabetic. The costs of treating diabetes and its devastating cardiovascular, renal, and neurological complications will so threaten the financial stability of the health care system, federal, state and activist local governments will likely impose regulations financially adverse on food processors like Heinz. The fast food restaurant industry is already in the class action tort bar‘s crosshairs.

Regulatory and legal scapegoating is safer politically and public relations-wise than addressing the profoundly negative social and economic train wreck wrought by feminist careerism. Pity the feminist sacred cow enjoys general immunity from criticism.

I believe the sale of company is the best way for shareholders to maximize share value.

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