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Thanks Howard.
I bought some DF in real life. I think their management had long been geared to empire-building rather than selling and delivering milk. I have no idea if they are correct about a stable commodity market, but I wouldn't bet a single penny on it. Even so, the way the milk market is structured, they should be passing increases (as well as decreases) along to customers. What doesn't float as much with the market are the "value added" goods. Those should be a relatively small (but certainly not insignificant) portion of the portfolio. All Dean has to do is pay better attention to their costs, take advantage of their moat, and steer a steady course for a couple of years. They generate plenty of cash to pay down their debts and there can't be too many empire additions available anymore. All of this is "confirmed" by the latest results...sales aren't higher, but profits are. That's the way it should play out for the next few years, over which I'm expecting a 3 to 4x appreciation.

LWAY on the other hand, only has value added products. They are much more susceptible to market swings. They've demonstrated poor skills at cost management of late, while building their own mini-empire behind an eroding moat. LWAY has not been worth its high price for quite a few years. It hasn't got a ton of upside, nor does it seem the price will crash (though I think it should). That said, I don't think you have much to lose if that 1/3 isn't overly important to you. You never know.

Best to you,
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