Why Food Stocks May Spoil in Your Portfolio in 2018

Not Even Consolidation Can Save Swooning Growth: The big food companies have made some token gestures on the healthy food front, often thanks to their gluttonous appetite for purchasing smaller food companies that find success. Examples include Mondelez International Inc. (NASDAQ:MDLZ)’s 2015 purchase of Enjoy Life Foods, and General Mills, Inc. (NYSE:GIS) acquiring the aforementioned Annie’s in 2014.

These acquisitions serve the dual purpose of allowing them to instantly add trending health brands to their portfolios, making them look health-conscious, while preventing any real competition from brewing that could threaten their dominance over grocery aisles.

However, the reality is that these companies have no plans to ever make healthy food a prominent part of their portfolios. Healthy and processed simply don’t go well together, and processed food is what these companies have been built to make. So unless consumers suddenly decide they don’t care how fat and diabetic they’ve all become and go back to eating processed junk in greater quantities, there’s little hope that the big food companies will see any meaningful return to growth any time soon.

Hedge Funds Souring on Food Stocks: When looking at hedge fund ownership data, it’s clear to see that hedge funds are ditching the shares of big food companies for more promising investments. Among the funds in our database, 53 owned shares of Mondelez International Inc. (NASDAQ:MDLZ) at the end of 2017, down from 57 just three months earlier. Ownership of Kraft Heinz Co (NASDAQ:KHC) fell to 42 from 54 during the same period, Conagra Brands, Inc. (NYSE:CAG) fell to 33 from 39, and Kellogg Company (NYSE:K) slid to 18 from 24.

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Disclosure: None