Sean wrote:The fish wrote:Care to share who you think would be the 'right' person to run TWE?
The biggest shareholders each have around 5% to 7% with names unfamiliar to most of us like FMR LLC and FIL, The Capital Group, Baillie Gifford & Co, BlackRock Group, and so on.
These are very very big global investors, among the top 10 institutional investors globally. Your talking guys who manage upwards of more than $1tn (trillion) of assets each (for the Fidelity Complex, Capital Group, BlackRock).
There are three key reasons investors have bought this stock:
1. There is a hidden upside from the inventory well above the book value as aged, high quality inventory can be sold for a large premium
2. China... China... China and other emerging markets will drive incremental demand for luxury wine and TWE is a clear cut proxy to this trade as being one of the largest and most liquid pure-play wine companies
3. There is value that could be unlocked through restructuring the various businesses (up to $6.50/share according to the bulls on the stock vs current share price <$4).
It seems to me the CEO selected is aligned to pursuit of the third option, which might be great from an institutional investor perspective. I am certainly considering buying some stock PA... (disclaimer: this is not investment advice and should not be relied on!)
But as a wine lover, I just long for the day when the core Aussie brands within TWE can be managed properly as an on-going business not a corporate restructuring play. I dont know all the industry insiders well enough (and there is no large cap pure play wine peer to poach from) to say THIS PERSON should be CEO, but in approach I would be hoping for someone in the LVMH mind set.
Those guys are probably one of the finest example I know of managing a "house of brands" across luxury goods where each brand maintains autonomy of product quality but benefits from the skills the broader team has in ramping up distribution channels, retail formats, etc, plus the enhanced financial strength of a larger organisation.
Tony Leon, the long-term head of Dan Murpyh's who moved to run Coles Liquor? Would have the inside run of how the supermarkets operate but also, in building out Dan's from 5 outlets to a "shedload" (technical term) also built the best retail liquor chain in the world (my opinion) which requires a good affinity with the quality and integrity of the brands you sell.... Just a random example.
What I would hate to see is another FMCG approach looking to "maximise operating efficiencies"... this is the path Fosters tried: consolidating production into a handful of industrial complexes (forget the term wineries) and aiming for minimum cost per unit of plonk like you would in a commercial brewery.
Imagine if LVMH had bought Church's and instead of maintaining production in Northamptonshire had shifted that to a single factory in China where they could be made alongside Ferragamo's, Prada's and all the other shoe brands they own. Would you still get £300 for a basic pair? Ohhh hell no.
