As Bud Light sales continue to swirl down the Dylan Mulvaney toilet, with the brand’s popularity likely irreparably harmed, Microsoft co-founder Bill Gates and ex-wife Melinda’s foundation recently purchased nearly $100 million of stock in Anheuser-Busch InBev, Bud Light’s parent company.
As a former investment advisor, I’m not sure. While the “buy low, sell high” strategy is valid in “normal” equity-market situations, A-B InBev‘s fortunes have continued to go from bad to worse, in contrast to the overall beer market.
Nevertheless, the Bill and Melinda Gates Foundation Trust purchased roughly 1.7 million shares of A-B InBev for about $95 million in the last quarter, according to a recent regulatory filing. Gates hasn’t issued a public comment about the purchase.
As we reported in early August, retailers across the country began to reallocate shelf space to other brands. Also in August, the multinational corporation began to sell off some of its other brands in a clearly defensive move.
While some industry analysts have upgraded A-B InBev stock to a “buy” recommendation, many of the same analysts predict Bud Light’s market share won’t return to its former position as America’s top-selling beer.
That’s a safe bet.
The Bud Light boycott succeeded for two primary reasons:
First, boycotters have readily available access to multiple alternatives to Bud Light at comparable prices. Second, when boycotters see that their efforts are causing financial harm to a targeted company, it’s tantamount to sharks smelling blood in the water.
Anyway, former Anheuser-Busch executive Anson Frericks on Wednesday called the Gates Foundation’s purchase a definite mistake:
Bill Gates is definitely making a mistake. Earlier this year, he already made a $900 million mistake when he invested into [sic] one of Anheuser-Busch’s largest rivals, Heineken. He did that earlier this year. And since that investment, Heineken’s down about 10 percent, whereas the broader markets are up 10 percent.
Frericks then brought up the fundament rule of investing in equities:
So if I was looking for advice on investing [in] software companies, tech companies, I might go to Bill Gates. But if you’re looking at the beer industry, he doesn’t have a great track record of investing in winners at this point.
Moreover, Frericks said, Gates doesn’t exactly represent the average “everyman” beer drinker.
For the company’s sake, they’d probably be better off [with] maybe somebody who is more of, kind of the everyman type of person, maybe like a Rob Gronkowski or somebody like that was investing into Anheuser-Busch, not necessarily somebody like Bill Gates. That doesn’t really resonate with sort of that common man that everyday Bud Light beer drinker.
I’ll go out on a limb and bet Gronk won’t be investing in — much less drinking — Bud Light, anytime soon.
So What Kind of Company Does Anheuser-Busch InBev Want to Be?
In the immediate aftermath of the Mulvaney disaster, A-B InBev execs continued to dig their hole deeper and deeper — and the digging continues. To that point, Frericks said the corporation has a fundamental problem in deciding what kind of company it wants to be.
There’s one camp that says that Anheuser-Busch — they have a fiduciary responsibility to their shareholders and to take a look at just providing great products and services for their shareholders. That’s the camp that I am in.
There’s another camp, this is in the BlackRock, State Street, Vanguard camp, that would have Anheuser-Busch focus on more stakeholders and stakeholder capitalism, having them not necessary [sic] focus on shareholders, but activists, political organizations, others.
I’m in the first camp, as well, as should be every corporate board on the planet. Without committed shareholders, public corporations are toast. That has always been the case, and it always will.
The second camp is doomed to failure. Companies are becoming increasingly aware that they could be “Bud-Lighted” for the idiotic decision to follow DEI (diversity, equity, and inclusion) or ESG (environmental, social, and corporate governance) investment models, or make ill-advised marketing decisions.
Target was unavailable for comment.
Incidentally, The Babylon Bee, the best satire site in the known universe, had its own unique take on the news.
Bud Light Welcomes New Investor Bill Gates With Limited Edition Jeffrey Epstein Cans
Is that perfect, or what?
— The Babylon Bee (@TheBabylonBee) September 6, 2023
The Bottom Line
Maybe the Gates Foundation will end up smelling like a rose, and maybe — like A-B InBev itself — the foundation will never recover its investment, much less increase its investment value. Either way, is it just me, or does the purchase itself, given Gates’s “background,” seem somewhat curious?
Never mind — I’m just thinking out loud.
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