New position: MTY Food Group

Hi everybody,

As I wrote on my Substack timeline earlier today, I added a position in MTY Food Group over the past few days. In late 2024 I had earmarked MTY as a tax loss buy for 2025, of the four ideas that I had, it would have been the only one that had not worked out since. Maple Leaf Foods (meat) was up over 100% last year, Parkland Corporation got taken private and Saputo (cheese-dairy) was a top performing TSX stock However, MTY Food Group has lost its lust. Once a favorite stock of the growth-compounder crowd, they seem to have abandoned the name after growth stagnated as consumer macro headwinds swept both Canada and the United States. I believe this space is a very good place to put capital to work despite the current weakness. Only today, UTZ, a junk food company, was taken private at a 91% premium showing how disregarded the space has been with public equity investors in a sea of AI-tech trades.

As MTY Food Group once again pulled back late last year, the stock once again got my attention as I became interested in the food theme given the broader weakness and negative sentiment in the space. In late November, the company announced they were initiating a strategic review with media reports confirming the company may be pursuing a sale. Given the low multiple at the time, analysts had put out promising outlooks should the company transact. TD had a $70 sum of parts target on it. At the time of the review, MTY shares were trading at a meager 7.2x ebitda which would put them at the bottom rung of their competitors in the space.