Can a day go by without one rumor that Kraft-Heinz (KHC) is going to buy someone? The hobbled acquirer has no real growth and the only way it seems to know how to get it is to purchase it. It's not like Kraft-Heinz is sitting there coming up with blockbuster offerings that are good and good for you.
So M&A is logical, if not imperative.
This morning we heard chatter that Colgate (CL) is in their sights. I find this fanciful because Colgate cherishes its independence and Kraft-Heinz will no longer go hostile after the aborted Unilever (UL) bid. Plus, Colgate's stock always trades at a premium -- it has a 25 P/E -- and that's way too expensive for Kraft-Heinz.
I can see this game play out every day. Would a brand new CEO at General Mills (GIS) want to sell out? I doubt it. Neither would the brand new CEO at Kellogg (K) or Mondelez (MDLZ) . Hershey's (HSY) been tried. Sure, there is Campbell's (CPB) with a big family position; ConAgra (CAG) , having just finished the key part of its restructuring; and Pinnacle Foods (PF) , which was once for sale. It's not big enough, though, to move the needle.
When things are as buoyant as this market, it's pretty easy to gun a stock. We used to call it BGL, as the bandits came in and Bagged them, or bought the calls, Gunned them, which is what happens when you see a big call buy, and then Liquidate them right into those suckers' excitement that a story lurks behind the unusual options activity.
Sometimes you will be right. There are tons of acquisitions occurring. But I think people have to understand that Colgate is fierce in its independence, so to succumb now just doesn't fit the profile.
