I’ve been buying up shares of Tofutti. I’ve been following Tofutti off and on for years. Tofutti was founded by David Mintz in the 1980s. He was running a Kosher catering business and buffet in NY and customers wanted a kosher ice cream dessert (can’t have meat and dairy in the same meal). Mintz thus experimented with tofu and made ice cream from it, and things grew from there. Eventually Mintz took the company public.
About 2011, Trader Joe’s ceased carrying Tofutti products and Tofutti lost approximately one third of its distribution. Times were tough and Tofutti began running losses. In the fall of 2016, Tofutti delisted from the NYSE because it had too many losses and not enough equity. Mintz loaned the company money to keep it going. That was rock bottom.
Tofutti turned the corner in 2016 and became profitable, again, in 2017. Earnings have been improving in 2018, too. The company’s vegan cheese line of products has been a source of growth to complement its dessert line that has leveled off. There’s a lot more competition in the plant based alternatives market than when Mintz started, but there’s also a lot more demand and it’s growing. He’s in the right space.
Some other good things:
In the news, you might have noticed the price of soy has plummeted as a result of the trade war. Soy is a major input cost for Tofutti, so for it, cheap soy is a good thing.
Also, Mintz still actively runs the company, at age 86! Much like Whole Foods was John Mackey’s baby, Tofutti is Mint’z baby. Also, like Mackey, Mintz will have to let go at some point. He owns over 50% of the shares. SEC filings show that in 2016 Tofutti hired an advisor to explore “strategic options” including a sale. In 2017, Tofutti terminated the contract with the advisor; however, it doesn’t take a genius to figure out that transition is coming, which likely means value will be unlocked for shareholders.
Tofutti shares trade “over the counter” on “pink sheets”. The trading volume is thin and sporadic. On that basis, alone, OTC stocks are risky. OTC markets don’t have the same level of scrutiny as NYSE and NASDAQ and largely are filled with junk. Tofutti is a diamond in the rough. Tofutti is a real company that has very little debt, a good amount of cash, good products, a low valuation, and a principled founder and owner that loves his baby and has seen it through from infancy to growth to troubled times to recovery.
Because it is so thinly traded, I’ve only been able to get so much, lest I push the price of the stock up. I’ll continue to place limit orders to see if I can add to the position.
The quarterly earnings report will come out soon. Should be good reading.
So head over to the grocery store and buy some Tofutti! I recommend the Tofutti Cuties ice cream sandwiches. Here is a short video about the founder of Tofutti: David Mintz.
P. Gustav Mueller