Kaushal Majmudar and Sam Namiri of Ridgewood Investments presented their in-depth investment thesis on Farmer Brothers (Nasdaq: FARM) at Best Ideas 2018.
Farmer Brothers is a national coffee roaster and distributor of coffee, tea, and culinary products established more than a century ago. The company has a strong presence in the direct-store-delivery segment of the coffee market and sells to thousands of customers, from small independent restaurants to large customers such as McDonald’s and Target. The company has grown sales volumes over the last five years, in part due to the established trend of increased coffee consumption in the U.S., with specialty coffee segments growing faster than the overall coffee market. FARM is in the midst of a corporate restructuring that should help increase EBITDA by 50+% over the next eighteen months. One of the key near-term catalysts that will drive value is the company’s recent relocation of its main manufacturing facility and headquarters from higher-cost Torrance, California to its growing facility in Northlake, TX. Other positives include recent tuck-in acquisitions that are expected to be accretive to EBITDA, and other operational improvements. Ken and Sam’s thesis is that once the new plant in Texas is fully operational and running closer to capacity, FARM could reap cost synergies that will drive cash flow growth and price appreciation over the next 18-24 months.
About the instructors:
Kaushal “Ken” Majmudar, CFA founded Ridgewood Investments in 2002 and serves as its Chief Investment Officer focusing on managing long-term Value Investing based strategies. Ken’s high level experience and work with clients has been recognized and cited on multiple occasions. He is a noted value investor who has written and spoken extensively on the subject of value investing and intelligent investing. Prior to founding Ridgewood Investments in late 2002, Ken worked for seven years on Wall Street as an investment banker at Merrill Lynch and Lehman Brothers where he has extensive experience working on initial public offerings, mergers and acquisitions transactions and other corporate finance advisory work for Fortune 1000 companies. He has been a member of the Value Investors Club – an online members-only group for skilled value investors founded by Joel Greenblatt – where he posted a buy recommendation on Nvidia in 2002 – possibly one of the best long-term investment ideas ever posted on VIC. He has also been a member of SumZero – an online community for professional investors, and written for SeekingAlpha – among others. Ken graduated with honors from the Harvard Law School in 1994 after being an honors graduate of Columbia University in 1991 with a bachelor’s degree in Computer Science. He is admitted to the Bar in NY and NJ, though retired from the practice of law, as well as a member of the CFA Institute and EO (Entrepreneurs Organization).
Sam Namiri recently joined Ridgewood to help build its Small and Microcap investments and will be co-managing the Ridgewood Select Value Fund with Ken. Prior to Ridgewood, Sam spent five years as an associate at Grand Slam Asset Management, a small cap value based Hedge Fund. Sam graduated with a bachelor’s in Industrial Engineering and Operations Research from UC Berkeley in 2005 and an MBA from Columbia Business School in 2012.
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