M & M's First Portfolio - Strategy Ideas?

[TheMotorcycleBoy]

TATE Brexit proof?
Hmmmm, interesting.
I suppose it takes a lot of sugar to make industrial amounts of fudge......

Psst - Tate no longer refines sugar and no longer holds the rights to the Tate & Lyle brand (or something along those lines), despite their corporate website being https://www.tateandlyle.com

Ah! I see now, I've been reviewing some of our current holdings....i.e.....to make sure we actually know exactly what they do, and have happened upon the Tate (& Lyle) wiki.

The divesting of the sugar refining part is mentioned here:

Disposal of sugar refining business
In July 2010 the company announced the sale of its sugar refining business, including rights to use the Tate & Lyle brand name and Lyle's Golden Syrup, to American Sugar Refining for £211 million.[15] The sale included the Plaistow Wharf and Silvertown plants.[15]

So why (in general), do firms do this, i.e. divest? Presumably Tate thought they'd be more profitable if they got rid, and someone else (ASR) thought they'd be more profitable with the divested chunk. What gives? How can both parties effectively prosper from the transaction?

Curious,
Matt

[EssDeeAitch]

TATE Brexit proof?


So why (in general), do firms do this, i.e. divest? Presumably Tate thought they'd be more profitable if they got rid, and someone else (ASR) thought they'd be more profitable with the divested chunk. What gives? How can both parties effectively prosper from the transaction?

Curious,
Matt

It's called Comparative Advantage, an economic theory developed by David Ricardo in the early 1800's. Do a search on the net for more info

[TheMotorcycleBoy]

So you've invested in a company without knowing what it does. Did you not read the Annual Report? Did you not read through the last couple of years of results announcements and trading updates to see the breakdown in revenues across different sectors and product lines and to get a feel for how honest and reliable the management are in their statements? If you didn't, then you've not really done enough research and IMO you need to do more before you decide to buy anything.

We were a little vague in our understanding...yes

But we need know what they roughly did/do, i.e. sugary and starchy things for the food/drinks industry. The main thing we missed was the divestment of the sugar refining biz. But given this was back in 2012 it's clear that this would not be stated in the last few ARs we processed.

However.....M&Ms severe laxity aside! Anyone care to explain why this one (TATE) is somewhat "Brexit" proof?

Matt

[Wasron]

However.....M&Ms severe laxity aside! Anyone care to explain why this one (TATE) is somewhat "Brexit" proof?

Matt

A couple of pages in the 2018 annual report might help.

p21 - >90% of Primary Products profit comes from North America

p24 - Europe, Middle East and Africa combined make up less than 30% of sales in Food & Beverage

So they’re a global company. Currency fluctuations could work either depending on what ultimately happens in Brexit, but they’re not reliant on a buoyant UK economy for sales.

Wasron