We created the Granola Fund partially as a joke. We’d already come up with the Bastard Fund and wanted some sort of counter balance to the bad boys portfolio; something that speaks to those investors who support companies that make the world a better place. Now I’m not saying that the people operating the companies in the Bastard Fund are bad people, because they’re not, just that the business entities they work for do questionable things. In the end, we all have to put food on the table.
Each of the 10 companies in the Granola Fund has something special to contribute to the world and I’ll try to point them out as simply as possible. Each company will appear along with its market cap and a link to both its home page and stock quote. Here they are as listed on the portfolio page:
Hain Celestial Group Inc. (HAIN) - $1.2 billion
Hain’s history dates back to 1926 as the Hain Pure Food Company. Since then the company has added many brands both through acquisition and in-house development, the most notable being the Celestial Seasonings Inc. herbal tea purchase for $390 million in June, 2000. Overnight, it went from being just a food company to beverages and beyond. They are the natural food industry.
Lifeway Foods Inc. – (LWAY) - $156 million
Tragedy struck this kefir producer in 2002 when Mike Smolyansky, founder, died of a heart attack. His daughter Julie, then 27, stepped in as CEO and she’s been there ever since. What exactly is Kefir? It’s essentially liquid yogurt without the big curds. In the next two or three years they’ll be bought by a bigger company once the word has spread about this healthy alternative. It’s only a matter of time.
Sun Opta Inc. – (STKL) - $789 million
Another company in the natural and organic food space, Sun Opta’s major product is soymilk; producing their own brand, SoyUm, as well as private label products for other companies. Not as well known as Hain Celestial, their sales are almost identical. Look for them to do big things in the future.
Gaiam Inc. – (GAIA) - $388 million
The company calls itself a lifestyle company. What exactly that is I’m not certain but I do know they got their start in Yoga. Anyway, they’ve had their ups and downs as a company but the future does look bright. Their financials are healthy and growing, primarily because they’ve moved from a product-based business to that of information provider and today, that’s where the money is.
Whole Foods Market Inc. (WFMI) - $6.2 billion
Who hasn’t heard of Whole Foods? They’ve become the evil empire of the natural foods business. You either love them or you hate them, there’s no in between. They recently bought Wild Oats, their biggest competitor, so the rich got richer. Seriously, though, if you believe in natural and organic foods, this stock should be on your plate.
Headwaters Inc. (HW) - $928 million
The company made its name with clean coal technology, turning coal and heavy oil into liquid fuels. Since then they’ve put their expertise to work in other areas like construction materials and other energy resources. Profits have been all over the map in the last three years but it plays in a very promising field and that gives me comfort.
Sunpower Corp. (SPWR) - $4 billion
The company is all about efficient solar power. Whether you are a business or individual interested in solar power, chances are good that you’ve dealt with Sunpower in one way or another. The best part: they made money, lots of it, in 2006. The future’s so bright, you gotta wear shades.
Color Kinetics Inc. (CLRK) - $455 million
Forbes magazine recently named Color Kinetics one of the 25 fastest growing technology companies in the United States. They are quite simply, the leaders in LED lighting. Don’t ask me to explain the technology but it’s my understanding that it simply provides a better light than traditional bulbs, not to mention being more energy efficient. It sounds like a win/win situation.
Pacific Ethanol Inc. (PEIX) - $627 million
Well, as the name suggests, the company produces and sells ethanol, primarily on the west coast. It’s sales are growing but is currently operating in the red. Rising corn prices have put a small dent in profits but not enough to affect future earnings. Bill Gates’ Cascade Investments owns 26 percent of the outstanding shares. That’s a good thing.
United Natural Foods Inc. (UNFI) - $1.35 billion
United is the largest independent wholesaler of natural and organic foods in the country. They serve over 18,000 customers, the biggest being Whole Foods, that accounts for 36 percent of the company’s sales. You can bet Whole Foods will be leaning on United for price concessions, etc. Despite that pressure, I still think the company can survive and thrive in this new economic environment.