It takes three licks to get to the center of Tootsie Pop. But how many phone calls it takes to contact the manufacturer,
Tootsie Roll Industries
? It seems to be quite a lot.
tossy roll
(Ticker: TR) is one of the nation’s largest candy makers and is a household name, but surprisingly little is known about its operations.
Many publicly traded companies are similarly obscure and certainly much larger than Tootsie Roll itself. Nonetheless, along with the famous chocolates, Tootsie Roll makes a range of treats from Junior Mint to Charms Blow He Pops to Double Bubbles. Rarely.
Given the company’s confidentiality and product, drawing parallels with the fictional Willy Wonka is difficult, but winning an interview with management is even harder than securing a golden ticket.
Tootsie Roll is a historically quiet confectionery company with CEO Ellen Gordon in her 90s. While she inherited her reins from her late husband, who was one of her oldest CEOs of an S&P 500 company, it’s her family that has ruled her for years.
Gordon was the second woman elected president of the New York Stock Exchange in 1978, and together with her family owns a majority of Tootsie Rolls, a higher percentage than any other S&P 500 CEO.
The company doesn’t interview analysts, doesn’t host investor calls, and has attracted attention from short sellers over the years, including its recent ride as a meme stock. Gordon gives interviews and speeches on a very irregular basis, but they aren’t usually centered around financial publications or his ongoing business with Tootsie Roll. .
company did not return Barons Request for comments. When we called corporate headquarters, an employee said that Gordon himself handles media correspondence and inquiries. Many of the relatively small number of shareholders who have been contacted have not yet commented.
Investors often hold shares in hopes of becoming a takeover target, but that hasn’t happened yet, with the stock only up 14% over the past five years compared to 60% in the S&P 500. .
At a yield of 1%, even if the company pays a 3% stock dividend, waiting doesn’t make much money. Nonetheless, stocks are profitable this year as the market as a whole has been hit hard.
More importantly, Gordon has repeatedly expressed her desire for Tootsie Roll to remain independent and family-owned in the past. The company previously said it had succession plans without disclosing details.Six years ago, Gordon said her four daughters are still in the business, and her grandson recently worked at Tootsie Roll. I noticed it started.
He may find that the company has changed very little since his grandmother took over. Tootsie Rolls sales and earnings have remained relatively stable over time. That said, earnings of 39 cents per share and his nearly $192 million earnings, as in 2013’s main Halloween quarter, would be less than they were then, given inflation. means that His earnings per share in the fourth quarter of 2021 were 39 cents, and earnings were him $183 million.
hershey
(HSY)’s earnings per share climbed from $3.72 in 2013 to $7.19 in 2021, nearing $9 billion in revenue that year.
No wonder so many are betting on acquisitions that have yet to materialize. Short sellers have pointed to concerns about a lack of valuations and expansion when they have targeted the company occasionally over the years.
So if it’s not for payouts or a big payday, is there any other reason to own stocks?
“Nostalgia” proposes to Brian Frank, Portfolio Manager of the Frank Value Fund, who does not own any shares. “But everyone knows these brands. I’m sure if you put this in the hands of aggressive or innovative entrepreneurs, they’ll do something with it. They’ll monetize that nostalgia.” I was able to.
That said, he admits he hasn’t passed on his affinity for Tootsie Roll to his children. Candy may be a relatively recession-proof business, but consumer brands have long had many shoppers an aversion to sugar. I was nervous about it.
Of course, the idea that we need to constantly optimize everything is a very modern phenomenon, one that has evolved in times of increasingly ruthless efficiency.
One consequence of Tootsie Roll’s stable business and low profile is that its underutilized assets are not keeping up. Others may wonder if something more sinister is going on.
But perhaps the gentler explanation is the most obvious. has long prided itself on providing products that provide an escape from life’s problems. That ethos can extend to business models where maintaining stability is blameless.
Earlier, when I wrote about my short meme stint on Tootsie Roll, several people told me about meeting Gordon years ago, highlighting her generosity and kindness.
With a net worth of well over $1 billion, Gordon and her family can afford to run Tootsie Roll however they please, and their strategy has paid off personally. Given what Gordon has said about her family legacy as a leader spanning five generations, it might be worth the cost for them. For the Gordons, ownership and profit pride go hand in hand and may be equally important.
As a billionaire, “I could launch a rocket into space, or buy a huge yacht… I could do worse,” says Frank.
Ultimately, Tootsie Roll may remain a mystery bound by familiar rappers.
Write to Teresa Rivas at teresa.rivas@barrons.com.
.
Comments
Post a Comment