Guru Joel Greenblatt (Trades, Portfolio) is a value investor who uses Benjamin Graham's value investing philosophies when deciding whether to buy or sell securities. He looks for long term growth opportunities in companies that have a large margin of safety. Greenblatt also teaches at Columbia University where he teaches value and special situation investing.
He is also an author of several books including "You Can Be a Stock Market Genius," "The Little Book That Beats the Market," and "The Big Secret for the Small Investor." Greenblatt is also the co-chief investment officer of Gotham Asset Management, which he manages alongside Robert Goldstein. Together they have over 50 years of investment experience.
In the third quarter of 2015, Greenblatt purchased 584,803 shares of General Mills (GIS, Financial).
General Mills is a manufacturer and marketer of branded consumer foods sold through retail stores. The company's products include baking products, cereals, pasta, vegetables and soup. They make very popular cereals such as Honey Nut Cheerios, Cheerios, Cinnamon toast crunch, Lucky Charms, Trix and Cocoa Puffs.They are also well known for their vegetable Green Giant products.
General Mills has a market cap of $34.76 billion, a P/E ratio of 24.15, an enterprise value of $43.3 billion and a dividend yield of 2.95%.
Below is a Peter Lynch chart for General Mills.
GuruFocus hasthree severe warning signs linked to General Mills:
Gross margin has been in long term decline. The average rate of decline per year is 3.3%.
Operating margin has been in five-year decline. The average rate of decline per year is 6.5%.
General Mills keeps issuing new debt. Over the past three years, it issued $748.2 million of debt.
I believe that purchasing General Mills is a risky purchase because of these reasons. The company's intrinsic value is worth far less than what it's currently trading for.
General Mills' EBITDA has been on the decline over the previous three years.
Cheers to your investment success.
