Third Point's Presentation on Campbells (CPB): Refresh the Recipe ~ market folly

Thursday, October 11, 2018

Third Point's Presentation on Campbells (CPB): Refresh the Recipe

Dan Loeb's hedge fund firm Third Point has an activist position in Campbells (CPB).  They recently released a presentation called #RefreshTheRecipe where they are pushing for change at the company.

Third Point highlights that Campbells has underperformed both peers and the S&P under various timelines (19% shareholder return vs 306% for S&P over the last 20 years).  Third Point seeks to replace the board to enact change and originally pushed for the company to sell itself or merge with another packaged foods company.

Dan Loeb's firm is looking to turnaround the soup business, stabilize the fresh food business and stop margin declines with disciplined cost management, and make the overall product offerings more relevant to modern consumers via ingredients/flavors and new designs/packaging.

For the snacks business, Third Point sees opportunity to innovate with new flavors, ingredients and packaging to drive market share, execute on deal synergies from the Snyder's-Lance deal, and wants them to explore divestitures of non-core brands like Pop Secret and Pepperidge Farm frozen cakes.

If the whole business were to be sold, they comp relevant transactions leading to a 14-15x EBITDA multiple, or between $52 and $58 per Campbells share.  CPB currently trades around $37.

Third Point's Campbell's Presentation: Refresh The Recipe

Embedded below is the slideshow:

For other recent hedge fund commentary, we posted up Bill Ackman's presentation on Starbucks as well as Greenlight Capital's Q3 letter.

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