Not often do you just sit back and marvel at what executives are doing. Yet on Thursday night I marveled at two of them: Jeff Ettinger at Hormel Foods (HRL) and Charif Souki from Cheniere Energy (LNG).
Hormel's decision to buy the Skippy peanut-butter business from Unilever (UN) -- announced Thursday -- is simply brilliant. The company will now dominate lunch, particularly the-bring-your-own-lunch contingent -- perfect for a country where the average worker is making less and less each year. Hormel is the player in ham, the No. 1 sandwich meat; this buyout will now make it the No. 2 player in peanut butter, the second-most-favored sandwich. It's incredible how smart that is.
Plus, Skippy fits perfectly into Hormel's Chinese strategy, as it can be the best-of-breed U.S. player in two foods that are loved in that country. Consider Hormel a possible Yum! Brands (YUM) for the Chinese make-your-own lunch crowd. This company already knows how to deal with the commodity problems that peanuts propose, as it's been doing that for years with beef. It can capture more aisle space, even in the Whole Foods (WFM) stores, because Skippy is a dominant player in natural peanut butter. In addition, Hormel's got plenty of cash even after paying its consistent dividend, so the $700 million acquisition won't be a problem.
It's just a terrific move -- the kind we need to see from companies to propel their stocks higher despite severe Washington headwinds.
Souki? What can I say? He takes my breath away. Here's a man who is eventually going to run the biggest exporter of liquefied natural gas in the world. He's a soft-spoken visionary who will have no competition for years, and is already ahead of schedule in building out nat gas export facilities.
He's got the wind at his back, with an already-established tank-and-pipe system from when his company developed infrastructure to import natural gas. He's got a hospitable government in Louisiana, an eager workforce, the best builder in Bechtel, amazing partners, all the best in the business and ironclad 20-year contracts to export abundant natural gas.
I have never seen so many skeptics about a story that seems to be panning out before our very eyes. Plus, Cheniere doesn't need money; it has it all. I bet by the time Souki is done building, he will have doubled the number of trains that he's currently planning -- the devices needed to move the stuff in super-cold compact form -- and shares of this $4 billion company will have doubled.
I like both of these CEOs for different reasons. Hormel, with this deal, joins ConAgra (CAG) as a not so-slow but oh-so steady player that can win the race. Cheniere? It's just the perfect speculative play. The U.S. has so much oil and gas that, frankly, we don't know what to do with it. Well, we might not know, but Soukis sure does!
