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Wednesday, October 26, 2005

Hanover Foods (HNFSA, HNFSB)

Hanover Foods is an old business, going back to 1924. It's in Harrisburg, Pennsylvania. Real rust belt stuff. Their property, plant, and equipment (PP&E) is about $200 million and has been depreciated down to $78 million. Old stuff.

This business has a lot of minor/regional food brands (mostly Penn Dutch) like Hanover Farms, Myers, Dutch Farms, O&C onions (in the jar, not the common ones in the can), Bickel's, Bon Ton, York Snacks, Wege Pretzels, Spring Glen, some others, and my favorite: Aunt Kitty's. Makes you think of kitty litter, no?

Revenues seem to increase at about the inflation rate. I've looked back as far as 1996. Share count has been very steady. They pay a $1.10 dividend per year. But don't let this fool you. The stock is selling at over $100/share.

Surrounding this old business is a raging family battle going back to 1996.
But then on Dec 6, 2004, the company made a tender offer for all of its odd lots of A shares (15 shares or less). The purpose was to decrease the number of shareholders of record to less than 300 so they could go dark on Jan 10, 2005. They went really dark: no press releases, no news, nothing. It's too bad because they're selling at a P/E of probably around 7.

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