Distiller MGP Ingredients Stock Plunged 24% on Disappointing Whiskey Sales

[GaryT]

Saw this article on Barron's - which initially I thought might be indicative that the bubble is getting ripe, but thinking it speaks more to MGP's management potentially.

 

https://www.barrons.com/articles/mgp-ingredients-stock-is-plunging-on-disappointing-whiskey-sales-numbers-51579279726

 

If I were them, I'd have bet that folks would be clawing to buy aged whiskey to throw labels on with their own false backstory, etc.  Maybe with folks like Peerless able to sell 2 & 3 yr old stock at BTAC prices - the market isn't rational (wait . . . not rational?)

 

Figured folks here would find this interesting.

[Richnimrod]

Hmmm. Sounds a bit premature to me (the judgement of investors, not the aging barrels!).   The stock taking a hit of that percentage seems like an over-reaction to some disappointing; but not fatal, news based upon the failure to sell (or contract for) as much aging whiskey as they had predicted.   Whiskey is not the only commodity they manufacture or sell, I'm confident.   And, if you look at earnings, it isn't as if they were off in prediction by a huge percentage.   The market seems to me to be taking the typical modern reactionary approach to investing.   Something along the lines of; 'If I have to hold a stock longer than the time it takes me to decide whether or not to change underwear without it making a killing for me, it must be dog, and I shall dump it.'   That is of course, just my uneducated view of the issue, and of the current market philosophy.   

I mean doesn't a company have some latitude to correct strategies, and re-load with a new one for some part of their overall business without being damned by the market for what seems to me a poor; but not insurmountable 6-months?

[Harry in WashDC]

44 minutes ago, Richnimrod said:

Hmmm. Sounds a bit premature to me (the judgement of investors, not the aging barrels!).   The stock taking a hit of that percentage seems like an over-reaction to some disappointing; but not fatal, news based upon the failure to sell (or contract for) as much aging whiskey as they had predicted.   Whiskey is not the only commodity they manufacture or sell, I'm confident.   And, if you look at earnings, it isn't as if they were off in prediction by a huge percentage.   The market seems to me to be taking the typical modern reactionary approach to investing.   Something along the lines of; 'If I have to hold a stock longer than the time it takes me to decide whether or not to change underwear without it making a killing for me, it must be dog, and I shall dump it.'   That is of course, just my uneducated view of the issue, and of the current market philosophy.   

I mean doesn't a company have some latitude to correct strategies, and re-load with a new one for some part of their overall business without being damned by the market for what seems to me a poor; but not insurmountable 6-months?

Once upon a time (circa 2011), I owned MGPI - bought it around $6.50 when it was in extremis, sold it around $16.  Only owned 1000 shares.  WHY did I take the flyer?  As the extract (below) which I copied from WIKIPEDIA today (18 Jan 2020), shows, and as Rich pointed out, selling wholesale whiskey to rectifiers (in the best sense of the term) was NOT its only business.  I looked at the numbers, figured it had a shot, especially with the resurgence of bourbon (which I later found out was a BOOM!), so I took a chance.  Why did I sell so "low" (noting that within a year of my sale, it was at $40)?  I didn't see the BOOM.  Also, a 150% profit is enough.  Used the money to pay off a mortgage.

 

Uh, also as WIKI says, Diageo is its largest customer.  I did not know that back then.  I wonder what Diageo thinks of the stock price slide and the alleged growing inventory of unsold product?  Could another Orphan Barrel be in the offing?  How about, "Little Orphan Indiana"?  The potential is almost unlimited.  EDIT - Well, the TATER market is apparently unlimited.  AND, unrestrained!!

 

FROM WIKI -

 

MGP of Indiana (Midwest Grain Products of Indiana^[1]) is a distillery in Lawrenceburg, Indiana, producing spirits for private label sale.^[2][3] These are sold under about 50 different brand names by various bottling companies, with a recent addition of their own products, Till Vodka, George Remus Bourbon, and Rossville Union Straight Rye Whiskey.^[4][5] The facility's largest customer is the London-based multinational beverage giant Diageo.^[6]

History

The distillery was founded in 1847^{[citation needed]} and purchased by Seagram in 1933.^[7] While under their ownership, the distillery was called the Jos. E. Seagram Lawrenceburg Plant. When Seagram's assets were acquired by other companies, the Lawrenceburg distillery became the property of Pernod Ricard.

On April 19, 2006, Pernod Ricard announced plans to close the distillery, but instead sold it in 2007 to CL Financial, a holding company based in Trinidad and Tobago, which renamed it "Lawrenceburg Distillers Indiana" (LDI). CL Financial later collapsed and required government intervention, although the facility continued to operate through the company crisis.

In October 2011, MGP Ingredients announced that it had reached an agreement to purchase the distillery, giving it its present name.^[8] As of 2012, Diageo is the distillery's biggest customer.^[6]

[END FROM WIKI although the entry I clipped from is a lot longer.] 

Edited January 18, 2020 by Harry in WashDC