Another company that fits into my series on non-cash dividends from Swiss companies is Bell Food Group AG.
I have again prepared everything here for you. Only the tables with the key figures and detailed calculations I can not reasonably present here. As always, you can find them here in my blog:
https://www.valueinvestments.ch/bell-food-group-ag-sachdividende-2022
𝐁𝐞𝐥𝐥 𝐅𝐨𝐨𝐝 𝐆𝐫𝐨𝐮𝐩 𝐀𝐆 - 𝐞𝐢𝐧 𝐞𝐫𝐬𝐭𝐞𝐫 Ü𝐛𝐞𝐫𝐛𝐥𝐢𝐜𝐤
In keeping with the barbecue season, today I would like to introduce a company from the Basel region: Bell Food Group AG - better known as Bell. I like to buy shares in a wide variety of companies from the immediate area to keep my finger on the pulse of the region and the economy and to go to the various general meetings. While the 𝐁𝐞𝐫𝐤𝐬𝐡𝐢𝐫𝐞 𝐇𝐚𝐭𝐡𝐚𝐰𝐚𝐲 𝐢𝐧 𝐎𝐦𝐚𝐡𝐚 AGM is a first-class experience - you don't always have to make such a long trip: The companies in the region also have a lot to offer. As an asset manager, this is an opportunity for me to get in touch with employees and other shareholders. This exchange often allows exciting insights into companies and provides inspiration for new ideas.
Now you may ask why Bell ended up in a series on the topic of non-cash dividends? Bell is actually not known for dividends in kind, but rather for copious catering at the Annual General Meeting itself. Malicious tongues might claim that I bought the stock just to get my 𝐁𝐚𝐮𝐜𝐡 𝐯𝐨𝐥𝐥𝐳𝐮𝐬𝐜𝐡𝐥𝐚𝐠𝐞𝐧 at the AGM - and originally they would have been at least partly right. But that part of the plan went thoroughly awry - the General Assembly could not take place for the last two years because of the Corona pandemic. I was all the more surprised when I suddenly received vouchers for Bell Food Group AG products with the voting documents for the AGM - and not in short supply. So in addition to the cash dividend, there was also a culinary one.
With this post, I take you on a little 𝐑𝐞𝐢𝐬𝐞 through the 𝐁𝐞𝐥𝐥-𝐔𝐧𝐢𝐯𝐞𝐫𝐬𝐮𝐦. The yield of the natural dividend was also photographed and pre-tasted, of course. Of course, I will also go into some of the financials of Bell Food Group AG - as an asset manager, I just can't help myself.
𝐃𝐢𝐞 𝐁𝐞𝐥𝐥 𝐅𝐨𝐨𝐝 𝐆𝐫𝐨𝐮𝐩
The Bell brand is a household name, at least to carnivores in Switzerland. Bell's headquarters are located in Switzerland - Basel to be precise. Bell looks back on a 153-year tradition: in 1869, the company was founded by Samuell Bell-Roth - at that time as Ochsenmetzg. The joint-stock company then came into being in 1907, which already at that time took up residence on Elsässerstrasse in Basel, where it still has its headquarters today.
In 2021, Bell Food Group was able to generate sales of 4.2 billion Swiss francs, increasing this by 3.2 % compared to the previous year. Last year's annual profit was 129.5 million Swiss francs, surpassing 2020 by a full 10 %.
Today, the Bell Food Group is also active internationally - divided into five business divisions with the following four main brands:
𝐁𝐞𝐥𝐥
Bell went from being a small ox butcher - founded on March 29, 1869 - to the number 1 in the Swiss meat industry. Bell is also one of Switzerland's largest food brands in meat, poultry, sausages, and fish and seafood. It was not until 2006 that Bell ventured its first steps abroad. Today, the Bell International division operates sites and sells meat products in France, Belgium, Germany, Austria, Poland, Spain and Hungary.
𝐄𝐢𝐬𝐛𝐞𝐫𝐠
The Eisberg brand complements Bell's product range and offers meat-free, ready-to-eat convenience products. Especially in Eastern Europe, Eisberg is one of the most important brands for convenience salads. The range is also complemented by sliced salads and fruit and vegetable portions that are already sliced. The production plant in Poland supplies the Czech Republic, Germany and Slovakia. Slovakia and the Czech Republic are also supplied from Hungary, as are Croatia and Slovenia. The site in Romania also supplies Moldova. The site in Switzerland supplies Lichtenstein and France, and the site in Austria supplies Germany as well as Poland. The purchasing department for Eisberg products, among others, is located in Spain.
𝐇𝐢𝐥𝐜𝐨𝐧𝐚
The collaboration between Bell and Hilcona began with the merger in 2011. Then in 2017, Toni Hilti Familientreuhänderschaft sold its shares to Bell Food Group AG, which completed the acquisition by Bell. Hilcona has a strong presence in the convenience market. This means that fresh products are prepared for customers ready for consumption. A wide range of products is offered, from prepared pasta and frozen veggie products to buffet solutions for the hotel industry. Thus, Hilcona offers a wide range of products. In the EU, the focus is on fresh pasta, which is already prepared and can be eaten directly.
𝐇ü𝐠𝐥𝐢
Hügli serves a different spectrum of convenience products than Eisberg and Hilcona: known mainly for soups, bouillon and dessert in the form of dry or liquid products. Hügli was acquired by Bell Food Group only about four years ago in 2018.
𝐃𝐢𝐞 𝐀𝐤𝐭𝐢𝐞 𝐝𝐞𝐫 𝐁𝐞𝐥𝐥 𝐅𝐨𝐨𝐝 𝐆𝐫𝐨𝐮𝐩 𝐀𝐆
The Corona crash was also observed in the shares of Bell Food Group AG. At the high around February 21, 2020, one share still cost 281.- Swiss francs. On March 16, 2020, it was then only 210.-. With a minus of around 25.3%, this was in line with the overall stock market or even slightly better.
In the extraordinarily good year of 2021, the Bell share then again reached a high of 310.- Swiss francs in November 2021. This year, the euphoria has subsided again and has been dampened by the new crises: The share price today is 258.-.
So it can be stated: Shareholders of the Bell Food Group have not made a single franc in profit from the high in February 2020 until today, if you only look at the share price.
As I mentioned at the beginning, my motivation for buying Bell shares was not the financial gain - even if I am just as happy to take that. Consequently, there is not a single Bell share in any of the securities portfolios of my clients in asset management.
In the next section, I will take stock of the situation and show whether the investment has paid off for me.
𝐀𝐤𝐭𝐢𝐞𝐧, 𝐃𝐢𝐯𝐢𝐝𝐞𝐧𝐝𝐞𝐧 & 𝐅𝐥𝐞𝐢𝐬𝐜𝐡
Fortunately, I didn't buy the stock at the high in February 2020. But I also didn't catch the low of 210.- Swiss francs. My entry was at 237.50 on April 21, 2020, so after the low from the Corona crash, when the share price had already recovered 13.1% on the stock market. I could already guess then that it would not work out with the AGM in 2020. But as a value investor, I had to seize the opportunity and buy what was offered to me at discount prices. The prospect of future dividends in kind was too tempting to resist.
So far, the timing of the purchase hasn't been a total failure financially either: currently, the share price is up 8.6% - over a term of around 2.3 years, that's a return of around 3.7%. It could be worse, but it is also no comparison to the value & momentum strategy I usually follow when investing.
But now add dividends and distributions from capital reserves per share:
𝐃𝐢𝐯𝐢𝐝𝐞𝐧𝐝𝐞𝐧𝐳𝐚𝐡𝐥𝐮𝐧𝐠 𝟐𝟎𝟐𝟎: CHF 2.25
𝐀𝐮𝐬𝐳𝐚𝐡𝐥𝐮𝐧𝐠 𝐊𝐚𝐩𝐢𝐭𝐚𝐥𝐫𝐞𝐬𝐞𝐫𝐯𝐞 𝟐𝟎𝟐𝟎: CHF 2.25
𝐃𝐢𝐯𝐢𝐝𝐞𝐧𝐝𝐞𝐧𝐳𝐚𝐡𝐥𝐮𝐧𝐠 𝟐𝟎𝟐𝟏: CHF 3.25
𝐀𝐮𝐬𝐳𝐚𝐡𝐥𝐮𝐧𝐠 𝐊𝐚𝐩𝐢𝐭𝐚𝐥𝐫𝐞𝐬𝐞𝐫𝐯𝐞 𝟐𝟎𝟐𝟏: CHF 3.25
𝐃𝐢𝐯𝐢𝐝𝐞𝐧𝐝𝐞𝐧𝐳𝐚𝐡𝐥𝐮𝐧𝐠 𝟐𝟎𝟐𝟐: CHF 3.50
𝐀𝐮𝐬𝐳𝐚𝐡𝐥𝐮𝐧𝐠 𝐊𝐚𝐩𝐢𝐭𝐚𝐥𝐫𝐞𝐬𝐞𝐫𝐯𝐞 𝟐𝟎𝟐𝟐: CHF 3.50
𝐓𝐨𝐭𝐚𝐥 Dividend payments & payments from capital reserves: CHF 19.-
But that's not all - or as a famous CEO once said - 𝐎𝐧𝐞 𝐦𝐨𝐫𝐞 𝐭𝐡𝐢𝐧𝐠!
Of course, the most important - or what this series is all about cannot be missed! The dividends in kind, or in Bell's case, rather, dividends in kind: In both 2021 and 2022, there were 𝐆𝐮𝐭𝐬𝐜𝐡𝐞𝐢𝐧𝐞 for meat products from Bell.
In 𝟐𝟎𝟐𝟐, the value of goods was 𝐂𝐇𝐅 𝟐𝟑.𝟓𝟓. In 2021, the merchandise value of the vouchers was in a similar range. For simplicity, I used 47.10 Swiss francs (= 2 x CHF 23.55) as the total amount:
This resulted in a 𝐆𝐞𝐬𝐚𝐦𝐭𝐫𝐞𝐧𝐝𝐢𝐭𝐞 𝐯𝐨𝐧 𝟏𝟒.𝟒𝟕 % per share and year. Of course, that looks fantastic at first glance. Of course, this is more of a gimmick, because you can never scale it like that and certainly not really calculate with it.
𝟏. If this calculation only works if you have 𝐞𝐢𝐧𝐞 𝐞𝐢𝐧𝐳𝐢𝐠𝐞 𝐀𝐤𝐭𝐢𝐞, then you can add the whole value of the natural dividend to this.
𝟐. There is 𝐤𝐞𝐢𝐧𝐞 𝐆𝐚𝐫𝐚𝐧𝐭𝐢𝐞 that vouchers in this value will be sent in the next years as well.
Of course, if one wants to do some 𝐬𝐞𝐫𝐢ö𝐬𝐞𝐫 math, one can just consider the 𝐊𝐮𝐫𝐬𝐠𝐞𝐰𝐢𝐧𝐧 𝐩𝐥𝐮𝐬 𝐝𝐢𝐞 𝐃𝐢𝐯𝐢𝐝𝐞𝐧𝐝𝐞𝐧 𝐮𝐧𝐝 𝐀𝐮𝐬𝐳𝐚𝐡𝐥𝐮𝐧𝐠𝐞𝐧 𝐚𝐮𝐬 𝐊𝐚𝐩𝐢𝐭𝐚𝐥𝐫𝐞𝐬𝐞𝐫𝐯𝐞𝐧. Then a total return of 𝟔.𝟗% 𝐩𝐫𝐨 𝐀𝐤𝐭𝐢𝐞 and year results.
𝐅𝐚𝐳𝐢𝐭: 𝐁𝐞𝐥𝐥 𝐅𝐨𝐨𝐝 𝐆𝐫𝐨𝐮𝐩 𝐀𝐆 - 𝐊𝐞𝐧𝐧𝐳𝐚𝐡𝐥𝐞𝐧 𝐁𝐞𝐥𝐥 𝐅𝐨𝐨𝐝 𝐆𝐫𝐨𝐮𝐩 𝐀𝐆
Bell Food Group AG seems to be valued rather low at the moment. In all three areas, i.e. the 𝐏𝐫𝐨𝐟𝐢𝐭𝐚𝐛𝐢𝐥𝐢𝐭ä𝐭, 𝐅𝐢𝐧𝐚𝐧𝐳𝐢𝐞𝐫𝐮𝐧𝐠 and the 𝐄𝐟𝐟𝐢𝐳𝐢𝐞𝐧𝐳, Bell Food Group AG looks good. Only the liquidity ratio 3, also known as the current ratio, has deteriorated somewhat: that is, the ratio of current liabilities to current assets has deteriorated somewhat. However, at a value of 1.73, this ratio is still absolutely okay. This means that the Bell Food Group has 1.73 times more current assets than current liabilities and will be able to pay its bills in the future.
𝐕𝐚𝐥𝐮𝐞 𝐂𝐨𝐦𝐩𝐨𝐬𝐢𝐭𝐞
Bell Food Group AG has a Value Composite of 12 - this is very low and also means that the company is valued low from this perspective.
𝐏𝐢𝐨𝐭𝐫𝐨𝐬𝐤𝐢 𝐅-𝐒𝐜𝐨𝐫𝐞
Bell Food Group AG has an F-Score of 8, which is the second best score it can get on the 0-9 scale. This means that Bell Food Group is very well positioned and profitable. Especially if you take into account the research of Professor Joseph D. Piotroski: After all, companies that scored the highest 8 or 9 were able to achieve an average excess return of 13.4% over the market over the 20-year period from 1976 to 1996. Here, however, I would like to offer my word of caution: NOT every company with an F-Score of 8 or 9 achieves such a return! Some are well above it, some may be close to it, and still others well below it. Such studies always take into account a diversified portfolio of securities. So simply buying a stock like this doesn't work. In my own investments, and especially as an asset manager, I make sure to keep a close eye on so-called individual stock risks.
𝐖ü𝐫𝐝𝐞 𝐢𝐜𝐡 𝐝𝐢𝐞 𝐀𝐤𝐭𝐢𝐞 𝐝𝐞𝐫 𝐁𝐞𝐥𝐥 𝐅𝐨𝐨𝐝 𝐆𝐫𝐨𝐮𝐩 𝐀𝐆 𝐡𝐞𝐮𝐭𝐞 𝐤𝐚𝐮𝐟𝐞𝐧?
Even though this stock has never been about financial gain for me - today, from a value perspective, I have to say that Bell Food Group shares seem deeply valued. There is nothing wrong with the figures - except that they are not yet reflected in the share price.
However, in the current environment with high inflation, especially in commodities, logistical problems in supply chains and the war in Ukraine, one has to be careful. In this environment, you have to be very selective. Currently, I see more opportunities in the commodities sector, as you can read in my recent posts on rebalancing. There are currently equally profitable companies that offer better price momentum than Bell Food Group.
However, I will definitely keep my one Bell Food Group share - they have no weight in the portfolio and the next AGM is sure to come.
When managing assets for my clients, I look for a combination between low valuation and high momentum. My current portfolio in the asset management of Estoppey Value Investments can also be found in the blog under the latest rebalancing:
https://www.valueinvestments.ch/blog
