Campbell's stock underperforms due to poor capital allocation in a declining sector
"However, we have to make a distinction between food, corn, soybeans, fertilizers, things like that, and food brands that are in a highly competitive environment. Campbell's has great cash flows but reinvests them in a bad sector trying to survive, unlike Buffett who reinvested differently after acquiring Berkshire. I'm seeing here acquisitions totaling 1.8 billion, 6.7 billion, and 2.5 billion, while the market cap is lower than what they spent, indicating a misallocation of capital. In the end, I think it's best to leave this to pension funds as I have put it on the quadrant around 6% and I will not follow it."
The speaker critiques Campbell's stock by highlighting that despite strong cash flows, the company's reinvestment in a declining, highly competitive sector has led to poor capital allocation. The acquisitions have exceeded its market cap, underlining a structural issue that diminishes its appeal for active investors, and suggesting that it is more suitable for defensive positions held by pension funds, especially with no near-term catalyst to drive significant upside before 2030.
Target:N/A
Horizon:Long-term >1 year Company CommentaryBearish High ConvictionScore: 6.6
Company Opinion •Value Investing with Sven Carlin, Ph.D. • Jan 3, 2026