Guru Ron Baron (Trades, Portfolio)Â reduced his position in United Natural Foods Inc. (UNFI, Financial) by shaving 2,713,307 shares from his portfolio on March 31.
United Natural Foods is a distributor of natural, organic and specialty foods and nonfood products in the U.S. and Canada. The company offers more than 85,000 high quality natural, organic and specialty foods and nonfood products, consisting of national, regional and private label brands grouped into six product categories: grocery and general merchandise, produce, perishables and frozen foods, nutritional supplements and sports nutrition, bulk and foodservice products and personal care items. It serves more than 40,000 customer locations primarily located across the U.S. and Canada.
United Natural Foods has a market cap of $1.9 billion, a P/E ratio of 14.51, an enterprise value of $2.34 billion and a P/B ratio of 1.33.
United Natural Foods has two severe warning signs, according to GuruFocus, which may have influenced Baron’s decision to reduce his stake. The company’s gross margin has been in long-term decline at an average rate of 2.2% over the previous 10 years. United Natural Foods' asset growth is growing faster than its revenue growth, which means the company may be becoming less efficient.
It is possible Baron reduced his position in United Natural Foods because of the company’s declining gross margins and the company's new issuance of long-term debt. United Natural Foods has issued $232.25 million of debt over the previous three years, lowering the probability of increasing its revenues and profit.
Baron is a New Jersey native who attended Bucknell University in Pennsylvania where he received his B.A. in chemistry in 1965. Upon graduation, Baron landed his first job at the U.S. Patent and Trademark Office as a patent examiner. From there, Baron decided that the patent office wasn’t the place where he wanted to spend the rest of his career. Baron decided to switch career tracks and changed his life path by accepting a job working as a security analyst.
Over the course of the next several years, Baron worked at various brokerage firms where he gained valuable wisdom and experience. On March 16, 1982, more than a decade after he left the patent office and began working in the investment industry, Baron founded Baron Capital, which owns 313 stocks with a total value of $21.591 billion.
United Natural Foods is also traded in Germany.
Cheers to your investment success.
Disclosure: Author does not own any shares of this holding.
