Today I’m going to do something scary. I’m going to take you back in time. Way back.
The first thing I ever wrote on the internet was on Christmas Eve 2005. This fellow was asking about a post I wrote just two weeks later. To show you how much my posts have changed – I was under the impression blogging meant tons of short, opinionated posts – here’s my January 2006 post “On Chicken Stocks”:
Chicken stocks were in the news yesterday as Pilgrim’s Pride warned of poor earnings. These stocks may appear cheap, but appearances can be deceiving. It is not a question of if margins will contract; it is a question of when margins will contract. Some value investors will take Pilgrim’s announcement as a buying opportunity. It may be just that.
However, I wouldn’t be buying Pilgrim's Pride (PPC). When trouble comes, the much smaller, much more conservatively financed Sanderson Farms (SAFM) will be in the stronger position. Sanderson Farms has the better recent record when it comes to earning a good return on capital. On the other side of the scales, Sanderson Farms does trade at a higher price to sales ratio than Pilgrim’s Pride. In a business like this, price to sales can be an important number, because there is little reason to expect any one company to consistently maintain a wider profit margin than the rest of the industry.
I won’t pretend I understand this industry. I don’t. I won’t pretend I have any clue as to what these firms will earn over the next few years. I don’t. What I do know is that if I were looking at chicken stocks, I’d start with Sanderson Farms. I suggest you do the same.
You’ll notice there are no numbers in that post. Back then, I thought readers hated numbers. Do they? I’m still not sure. All I know is that I love writing numbers. So readers will have to take my posts with numbers mixed in or go find themselves another blog to read. You’ll also notice there are no dashes in the post. There’s even a semicolon. Maybe I was going through a Herman Melville stage. Yes, even my punctuation has changed. Half a decade of writing for the internet will do that.
Anyway, here is the Wayback Machine archive for Gannon On Investing. You can read my old posts and see all the things I got wrong. History is a harsh mistress.