Assume the brace position

By Frank Buhagiar on Monday 6 November 2023

Assume the brace position
Image source: Assume the brace position
CommentaryFoodTech Investment

Food on the Move: FFF’s weekly roundup of listed FoodTech’s movers & shakers

All set for a Food on the Move Halloween Horror Show for the week ended Friday 3 November 2023? After all, the week did include Halloween.  It also followed eight down weeks in a row for FFF’s listed foodtech space (more share price fallers than risers). And for the previous two weeks, the number of fallers had outnumbered risers by around three-to-one.  So, brace position assumed? If so, no need. Not a horror show in sight.  Wasn’t even close.  A veritable turning of the tables in fact – 36 share price risers, a measly seven fallers and three non-movers.  At ease ladies and gentleman!

Why the turnaround? Almost across-the-board share price rises, a clue perhaps. Points to an overall shift in market sentiment. Quick check of the barometer aka the US Treasury market for confirmation.  As Reuters reports: “Wall Street's main stock indexes rallied on Friday as bond yields fell sharply after data showed signs of slowing U.S. jobs growth and an uptick in unemployment, boosting hopes that the Federal Reserve is done with its interest rate hiking campaign.”

According to the newswire: “For the week, the S&P 500 gained 5.9%, for its biggest gain since November 2022 and Nasdaq added 6.6%, also showing its biggest gain since Nov. 2022. The Dow showed a weekly gain of 5.1%, its biggest since late October 2022.” And as for those bond yields: “The jobs data also helped push U.S. Treasury yields lower for the fourth consecutive session…the benchmark 10-year Treasury yield hit its lowest level in over five weeks.” Food on the Move takes some of the credit.  Last week’s Unforgiving Markets called for the return of summer. Ok weather no way near summerish, but a definite summer feel to markets all the same. Call answered, it seems.

Spoilt for choice in terms of stock gainers to mention. Where to start? With the biggest riser, Benson Hill.  And by some margin – shares up 149% to US$0.399, more than making up ground lost the previous week when the shares shed half their value.  Rewind back to last week and Food on the Move was highlighting how Benson’s strategic review update was due on 31 October. Soaring share price suggests the update was worth the wait. Title of the company’s press release serves as a summary: “Benson Hill Takes Steps to Strengthen Financial Position and Accelerate Shift to Asset-Light Model Focused on Animal Feed Markets”. Highlights of the release include:

  • Expanded Liquidity Improvement Plan includes planned divestitures of processing facilities to enable an asset-light business model
  • Management has already secured nearly 50% of the cash needed to retire senior term debt
  • Commercially available proprietary soybean varieties and a future innovation pipeline give Benson Hill a first-mover advantage in animal feed and pet food
  • Deanie Elsner appointed permanent Chief Executive Officer to continue leading the evolution of Benson Hill

And speaking of the CEO, Deanie Elsner had this to say: “Based on our ongoing strategic review, we believe the strengthening of our financial foundation, moving to an asset-light business model, and introducing our innovations into attractive broader end markets, is the most feasible path forward for Benson Hill. Through the actions we have taken and are continuing to implement, we are poised to deliver significant value as a leader in AI-driven proprietary seed innovation. We are already making progress on our strategic path. With the expected divestiture of our processing facilities, we plan to retire high-cost debt and extend our liquidity by more than 12 months. In addition, we are engaged in discussions with potential partners to scale our current proprietary portfolio and product pipeline for large-acre U.S. animal feed and pet food markets.” Music to a ‘summery’ market’s ears. Same likely true of the company’s second press release of the day: “Benson Hill Transfers Ownership of its Seymour, Indiana, Crush Facility to White River Soy Processing with $36 Million Asset Purchase Agreement”.  US$36 million in the coffers certainly helps.  As does mention of AI in the CEO’s quote...

Benson Hill not the only FFF listed foodtech share price to more than double over the course of the week. Local Bounti, the other centurion – shares in the vertical farmer finished the week up 110% at US$2.63 thanks to a better-than-expected Q3 earnings report. According to Zacks Research: “Local Bounti…came out with a quarterly loss of $3.02 per share versus the Zacks Consensus Estimate of a loss of $3.25. This compares to loss of $3.90 per share a year ago.”

Bullish comment from CEO Anna Fabrega too: “Looking ahead, we are continuing to focus our efforts on operational improvement…to ensure that we are not only maximizing production volumes, but also our margins.  While these improvements aren't necessarily visible in our third quarter performance…we believe we are poised to deliver improved sequential performance in the fourth quarter as our enhancements take hold…we expect to begin delivering an acceleration in growth in the coming quarters." CEO’s words hit the mark - investors seemingly going loco for LOCL shares, including the Chief Technology Officer - Travis M Joyner shelled out US$100,000 to acquire 73,495 in his company’s shares on 1 November.

Time for one more.  Third highest gainer? Oatly courtesy of a 38% share price rise. The oat drink co. did announce “that one of Germany’s largest coffee chains, Coffee Fellows, will make Oatly Barista available in 275 of its locations across Germany, Austria, Belgium, Luxembourg and the Netherlands. Coffee Fellows’ customers can now enjoy all its coffee specialties dairy-free at no extra charge.” Enough to trigger a 38% share price rise? Of course not.  Coffee Fellow press release issued on 30 October. Oatly shares only started rising meaningfully from 2 November 2023 onwards.  Put that one down to that ‘summer feel to markets’.  Question is, a flash in the pan or the start of a long hot summer for markets and FFF’s listed foodtech space????