Company information Market cap: $149 million TTM Income: $6 million Share price: $4 Shares outstanding: 37.4 million Ticker: Key points Mama creations is a company going through an evolution from a pre-packaged food company to a one stop shop solution for the deli isle nationwide.
hey Kairo, amazing write-up. my thoughts here, a bit blunt - i cant help
As you mentioned, if they grow at compromised margins, then even 1B revenue would seem inadequate cause if you have 4 or 5 percent margins the you need scale to offset it - like costco
and 1b is not scale.
and i checked some reviews on amazon for thier meatballs brand which is mamamanchinis and people are shitting bad on this thing complaining about how it lacks flavor and etc
Yea I saw some negative reviews but the majority of reviews I saw were from people who really like the meatballs, unfortunately, for health reasons, I can’t eat red meat otherwise I would try them myself.
Yea I think I factored in slighter higher net margins around 6-7%, but lower margins would certainly have a negative impact. But Even with 5% margins, if the company did $1 billion in revenue, that’s $50 million in earnings and with 20x multiple, that’s a billion dollar market cap.
And yea sometimes CEO’s who are very self promoting are suspicious, but then again, I’ve noticed that some smaller companies are often more desperate to attract investors capital, so they’re more self promoting.
I wanted to buy it below $4, for me that was a fair price. I bought a very small position around $4 (much less than 1%). For now Im just watching this company, not buying more.
If they surprise me with faster growth and bigger margins I would possibly consider taking a bigger position.
Hi Matt, thanks for your writeups and the content you publish, I really enjoy it a lot! I have a question regarding this idea. While there is a current shift in consumer trends towards at home dining, and the deli isle remains a market that is fragmented, would supermarket in house labels be the best positioned to capture this market as they have the largest scale and insight into consumer purchasing preferences, as opposed to Mama's creations?
That’s a good question, It’s hard to find information on private label manufacturers. My best guess is that most retailers already do sell at least some of their private label products at the deli counter, along with various other products that they make fresh at the store (rotisserie chicken, fries, soup) and the rest they outsource for practical reasons such as short shelf life and the labor that’s needed to make basically restaurant quality items.
Most private label products on the other hand are usually lesser quality products than deli items, and are usually manufactured on massive scale by companies that focus solely on white label brands. In other words, grocery stores aren’t in the business of running a restaurant because it’s just not practical for them to do so.
Hi Matt, thanks for the reply! I actually wrote an email to you regarding discussing this investment idea. May I please know if I could contact you anywhere else to discuss the stuff you have written? Thank you!
That was remarkable. You should consider putting this write-up on Value Investors Club. Also, regarding the competition part, what worries me is that when big players in other domains see the potential in the deli space, they easily can shift attention and eat Mama's potential market share backed by their already existing infrastructure and expertise. How would they keep them out? I think the only way for them is to be cost efficient as possible and passing that to the consumer. What do you think?
Thanks! You’re too kind, I wish I was on par with some of the writers on value investors club. Some day.
That’s a good question, seeing as how Mamas was so easily able to shift from a prepackaged food company to deli aisle company, others may try to do the same to compete, which may force Mama to compete on price.
I guess their only real advantage is brand, quality of food, and preexisting agreements with grocers by which they can continue to cross sell. But competition could become a risk in the future.
hey Kairo, amazing write-up. my thoughts here, a bit blunt - i cant help
As you mentioned, if they grow at compromised margins, then even 1B revenue would seem inadequate cause if you have 4 or 5 percent margins the you need scale to offset it - like costco
and 1b is not scale.
and i checked some reviews on amazon for thier meatballs brand which is mamamanchinis and people are shitting bad on this thing complaining about how it lacks flavor and etc
so definitely people are not rebuying it
and the CEO does act like a salesman
Yea I saw some negative reviews but the majority of reviews I saw were from people who really like the meatballs, unfortunately, for health reasons, I can’t eat red meat otherwise I would try them myself.
Yea I think I factored in slighter higher net margins around 6-7%, but lower margins would certainly have a negative impact. But Even with 5% margins, if the company did $1 billion in revenue, that’s $50 million in earnings and with 20x multiple, that’s a billion dollar market cap.
And yea sometimes CEO’s who are very self promoting are suspicious, but then again, I’ve noticed that some smaller companies are often more desperate to attract investors capital, so they’re more self promoting.
You can say so.
I’m still working my thesis with this one.
And if in case I buy it, i wouldnt buy it at these levels
below 100 million would make it an attractive investment I think
What is your fair value for this company?
I wanted to buy it below $4, for me that was a fair price. I bought a very small position around $4 (much less than 1%). For now Im just watching this company, not buying more.
If they surprise me with faster growth and bigger margins I would possibly consider taking a bigger position.
Hi Matt, thanks for your writeups and the content you publish, I really enjoy it a lot! I have a question regarding this idea. While there is a current shift in consumer trends towards at home dining, and the deli isle remains a market that is fragmented, would supermarket in house labels be the best positioned to capture this market as they have the largest scale and insight into consumer purchasing preferences, as opposed to Mama's creations?
Thanks for the comment by the way!
That’s a good question, It’s hard to find information on private label manufacturers. My best guess is that most retailers already do sell at least some of their private label products at the deli counter, along with various other products that they make fresh at the store (rotisserie chicken, fries, soup) and the rest they outsource for practical reasons such as short shelf life and the labor that’s needed to make basically restaurant quality items.
Most private label products on the other hand are usually lesser quality products than deli items, and are usually manufactured on massive scale by companies that focus solely on white label brands. In other words, grocery stores aren’t in the business of running a restaurant because it’s just not practical for them to do so.
Hi Matt, thanks for the reply! I actually wrote an email to you regarding discussing this investment idea. May I please know if I could contact you anywhere else to discuss the stuff you have written? Thank you!
That was remarkable. You should consider putting this write-up on Value Investors Club. Also, regarding the competition part, what worries me is that when big players in other domains see the potential in the deli space, they easily can shift attention and eat Mama's potential market share backed by their already existing infrastructure and expertise. How would they keep them out? I think the only way for them is to be cost efficient as possible and passing that to the consumer. What do you think?
Thanks! You’re too kind, I wish I was on par with some of the writers on value investors club. Some day.
That’s a good question, seeing as how Mamas was so easily able to shift from a prepackaged food company to deli aisle company, others may try to do the same to compete, which may force Mama to compete on price.
I guess their only real advantage is brand, quality of food, and preexisting agreements with grocers by which they can continue to cross sell. But competition could become a risk in the future.
That’s something I’m keeping my eye on.