Note: this article is an opinion piece. It is not intended as investment advice. Those seeking investment advice should consult a professional adviser.
I thought I should wait a while before talking about the furore over My Food Bag, caused by insensitive remarks by Simon Henry, CEO of DGL, a chemical company that was listed at around the same time as My Food Bag… and is doing considerably better.
First, let it be said that Henry’s remarks, describing celebrity chef and former director and founder of the listed company, Nadia Lim as ‘a bit of Eurasian fluff’ were insulting and misogynistic. I really wonder what gets into the heads of some people at times; crowing about your own company’s success in comparison to a competitor is one thing, but hurling insults at one of the directors is quite another. The offending photo in the prospectus of the company shows Ms Lim in a casual setting holding tongs over a barbeque. She is dressed casually, shows a tiny bit of cleavage, and in no way appears to be trying to present herself as a supermodel.
Needless to say, out came the cancel culture mob who, with all the zeal of 16th-century witch hunters, tried to burn Simon Henry at the stake. The trouble is that if you forget the misogynistic and racist remarks made by Henry, the rest of his commentary about My Food Bag was correct. It is a bad investment.
It was a high profile IPO, mainly because of its constant presence in adverts and on our TV screens. DGL had a much quieter, but more successful share float. DGL floated a year ago at an initial price of $1; its current price is $3.28, having reached over $4.00 per share in April 2022. My Food Bag, by comparison, floated at $1.85 and is currently offered at $0.79.
The reason that I personally chose not to invest in My Food Bag was that, at the time of the IPO, the original founders and board members were all leaving the company. It was a clear case of ‘take the money and run’. That didn’t inspire confidence in the company as an investment. Also, the company is now in a crowded market; it might be the best known of its type but is suffering from competition from similar outlets, some offering cheaper products and better deals. My Food Bag is a ‘nice to have’, but unlike power companies, banks or rest homes, it is a company that may well suffer problems in times of economic difficulty (like now), as customers can easily switch back to doing their own shopping. It may turn out to be just a fad. I don’t invest in fads.
The real problem is the gross overreaction to Henry’s remarks. This time, it was more than the offender being given a hard time on Twitter. Fund managers stepped in to denounce Henry’s outburst and took his company off their list of favoured investments.
Yes, that’s right. Fund managers decided to turn into the morality police by removing DGL from its list of companies, even though its performance since listing on the NZX has been stellar.
Earlier on Thursday Kiwi Wealth chief executive Rhiannon McKinnon said it was in the process of adding DGL to its exclusions list in response to Henry’s “derogatory comments”. Kiwi Wealth’s responsible investment strategy considers environmental, social, and governance issues. McKinnon said it was particularly concerned with the governance of DGL and would be unlikely to invest in the company until it had a new chief executive. “You’d have to see some change at that level, for sure, which I imagine will be a little while away.”
Kiwi Wealth is owned by the NZ Super Fund, ACC and NZ Post and has $7 billion worth of assets under management.
Stuff.
And DGL is a company worth just under 1 billion dollars, and in a small share market like ours, fund managers should not be ignoring it – for any reason.
If you were an investor in Kiwi Wealth, how would you feel about that decision?
Of course, the problem is that, although humans are supposed to be intelligent creatures, far too many things are done on sentiment. I was watching the Eurovision Song Contest at the weekend. The British entrant was in the lead until the public vote was counted and then the Ukrainian entrant won by a landslide. Did the best song win the competition? The public vote was given entirely out of sentiment. It is a sentiment I understand but was it the best song? Because the best song is supposed to win – not the one performed by those you feel most sorry for.
(I loved the way Zelensky said that next year’s contest will go ahead in a rebuilt Mariupol. Obviously, they do not have anything like our Resource Management Act to deal with.)
Simon Henry deserved some pushback. His comments were out of line and his reputation has suffered as a result. However, it is completely unacceptable for fund managers to make investment decisions for their clients based on their position on the moral high ground. Like it or not, DGL is a well-run company, worth consideration for serious investors, and those who claim to act on behalf of their clients need cool heads to make decisions on performance, not on the grounds of sentiment.
We all do and say things that others might find distasteful from time to time. We are all human: even Simon Henry. That is not the point. Investing should never be a knee jerk occupation. Fund managers should always, without exception, act in the best interests of their clients… not behave like the Spanish Inquisition.