What do you do when you are trying to go long term? What do you do when you have to fight the short-termers who trade on every single data point and have programs that are unbeatable on a moment-to-moment basis?
Pretty easy.
You default to big themes, themes that aren't subject to the vagaries of the hedge funds and the algorithm traders who get in and get out a hundred times a week, or sometimes a day. You have no choice but to do so because you cannot play their game.
That's what is so terrific about today. It demonstrates the longer-term themes that have defined this show for some time and allow you to triumph over the flippers and the floppers by using their flailing to your advantage.
We've got so many examples today that I am just going to pick three to drive home the point.
The first is WhiteWave (WWAV). Here's perhaps the most key cog in the natural and organic food chain. You may not know WhiteWave, but if you go to the supermarket and want natural and organic milk, chances are you have bought their Horizon brand, the one with the cow on it (and I don't mean Elsie, or Elmer for that matter). Does anyone think that Horizon isn't natural? I bet little kids can spot this stuff.
Don't want regular milk? Too fattening? Too quick to spoil? Then you order almond milk or soy milk. These are plant-based drinks that WhiteWave dominates. I know first-hand how this is no craze. For the first three years at the inn I co-own, we always got by with milk, fat-free milk or cream. But we were overwhelmed by demand for soy and almond. It got to where we were doing almost equal amounts of plant-based and cow milk as the latter had simply gone out of fashion among many of our guests, particularly the European ones. No wonder WhiteWave had a currency hit this quarter. It's going gangbusters in Europe with this stuff.
Horizon's now branched out to other aisles of the supermarket, taking on snacks with that cow seal of approval on it. The stuff competes directly with Annie's, which was recently purchased by General Mills (GIS) and one has to wonder whether Annie's saw the Horizon writing on the wall.
Then, if you stroll over to the fresh produce aisle you are going to see the clear plastic containers of Earth Bound vegetables, including the lettuce that's a fixture in my house. It's not just the froufrou stores that sell the stuff. I saw it at the Acme in South Philly yesterday. That brand's mainstream.
So what's the deal with the selloff? Why did the stock open up almost $2 and then sell off badly? I think it is because CEO Greg Engles likes to under-promise and over-deliver. After the run this stock has had, it's worth it to be conservative. But remember, in Q4 the company started shipping plant-based milk to china. Given the cow shortage and the desire to have a healthier food chain, China could be a huge cash cow -- ha ha -- for WhiteWave next year, which is why it is such a huge buy. Plus, who knows? Coca-Cola (KO), Kraft (KRFT), Campbell's (CPB), Kellogg (K)? They are all desperate for more natural and organic. Even the acquisitive duo, Tyson (TSN) and Pilgrim's Pride (PPC) could snap this one up, Tyson being the colossus that took down Hillshire Brands and has done so well with it.
How about a second theme? You know, I think that the biotechs have it going over the Big Pharmas and we have seen that writ large today with some good news for Celgene (CELG) and for Gilead (GILD). Celgene has a bunch of abstracts out there for an upcoming hematology conference, plus the company owns a stake in Agios Pharma, with its revolutionary way of treating cancer. Gilead's hepatitis franchise has a bunch of challengers, but one of them, Merck (MRK), showed data this weekend that weren't exceptional enough to topple the king, so the stock plowed higher. Don't give up on Merck, as it has a fabulous pipeline of very big potential drugs and it is awfully cheap. My charitable trust tried to buy it this morning, but we were frozen out by restrictions. But both Celgene and Gilead look real good and I like the biotech stocks as much as ever as they are the laboratory for Big Pharma and the incubator of smaller biotechs.
Finally, there's the theme of mobile, social, the cloud and connectivity. Look no further than Alibaba (BABA), the Chinese Internet rival to Amazon (AMZN), except it has something that Amazon may never have: bountiful profits. Today is not only the eve of Veterans Day, it is the eve of Singles' Day in China, a day of gift-giving with a level of commerce equal to the whole week leading up to Christmas. This is one big deal of a day and Alibaba, with its no-inventory stores and excellent mobile offering, may justify this amazing move from $68, where it came public, to $117, where it is now bigger than Wal-Mart. I have said this one's going to $120, where it would be valued similarly to another favorite of mine, Facebook (FB), and I have also urged you to play it through Yahoo! (YHOO), which has a monster stake in the company and is trying to figure out a tax-efficient way to cash in on the position.
Yep, as I always say, default to the big themes. Go for natural and organic, biotech and social, mobile, the cloud and connectivity. Buy 'em when you can, when the short-termers give you a chance. Given how these hedge funds seem to buy high and sell low as a habit, these longer-term opportunities seem to be an annuity for those with a time horizon that's longer than the mayfly.
