During the first-half of 2017, the Fund took profits on two sets of Nestle (NSRGY) long-dated call options that the Fund purchased in 2013. At that time, Nestle was trading near CHFii 65 per share, and it seemed that the market indicated flat growth for the company. We thought otherwise, as we have been investors in Nestle’s common stock since 2007, and participated in many growth developments including, product innovations, new categories, acquisitions, emerging market growth, and management changes. We identified and executed on an intriguing value investment in late 2013 when we took advantage of an opportunity in call options. The Fund bought a set of options with a strike price of CHF 60, and another set with a strike price of CHF 68. In early June of this year, when Nestle common shares traded at approximately CHF 83 per share, the Fund sold these options as they were ’deep in the money’.
We believe that our diligence and advocacy for the Fund’s shareholders allows us to take advantage of opportunities like this. It also is an example of our knowledge of options and our discipline to sell when purchased securities arrive at full value. While the Fund sold the options, it continues to hold the common stock because of our continued long-term confidence in the historically steady performance of this global giant and its new CEO. The first major step the new CEO plans to take is the sale of their U.S. chocolate business, which will include the Butterfinger and Baby Ruth brands. We endorse the strategy of concentrating on faster growing segments in Nestle’s operations and staying ahead of changing markets, trends, and tastes.
From David Winters (Trades, Portfolio)' 2017 Wintergreen Fund Semi-Annual Report.
