Everybody knows Tootsie Roll (TR); founded back in 1896, the company has grown over the years, expanding its lineup of products to include Charms Blow Pops, Andes Mints, DOTS, Junior Mints, Charleston Chew and Dubble Bubble, notes Tony Sagami, editor of Weiss Ultimate Portfolio.
Those products are sold to roughly 3,100 customers, including supermarkets, dollar stores, drugstore chains, vending machine operators and warehouse clubs.
Unlike other larger food and beverage companies, Tootsie Roll is essentially controlled by the Gordon family. Ellen Gordon became CEO after her then-95-year-old husband passed away in 2015. She now controls more than 53% of the outstanding common stock.
I love it when insiders have a lot of their own “skin” in the game, and there are very few stocks with that degree of insider ownership.
Another thing I like about Tootsie Roll is that management doesn’t hold quarterly conference calls; they don’t interact much with the media and they’re largely ignored by analysts.
Management has also been adamant that Tootsie Roll isn’t for sale. But a steady stream of candy acquisitions over the past few years keeps the question alive.
Mars Inc. bought Wrigley in 2016; The Hershey Company (HSY) bought Amplify Snack Brands for $1.6 billion in 2018; and Italian candy giant Ferrero bought the U.S. candy operations of Nestle (NSRGY) for $2.9 billion in 2019.
I don’t know when or if controlling family members would ever sell. But if they were to do so, it would likely be at a nice premium to where the shares are trading today. If you’re worried that COVID-19 will drag Tootsie Roll down ... don’t. Tootsie Roll has been almost immune to the stock market selloff.
