Lancaster Colony (LANC)short, mcap=$5737m

LANC short pitch:
– Seller of packaged food to grocery stores and restaurants, looks to be short.
– Core retail business faces secular challenges – volume is falling from the shift to healthier foods.
– New product introductions and pricing catch-up have masked underlying volume declines.
– However, these benefits should abate in the coming quarters.
– Company’s 2024 earnings estimates assume margins return to pre-2021 food price spike levels, which is way too bullish.

LANC valuation:
– LANC trades at >20x this year’s EBTIDA or about 50x FCF.
– Much better businesses trade at these multiples.
– Fair value is 40% lower.

Exp. gain: 40%

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