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(B)(N) MDLZ Mondelez International Incorporated

August 19, 2013

Drama. Mr. Ackman of Pershing Square Capital Management LP has recently exited his position in Mondelez International Incorporated (formerly Kraft Foods), and that makes news (The Wall Street Journal, August 14, 2013, Ackman’s Pershing Square Exited Mondelez in Second Quarter) even though his position was relatively small at about $200 million and much less than 1% of the company’s market value which is currently $55 billion and up +100% since it first became eligible for the Perpetual Bond™ in early 2009. Please see Exhibit 1 below – Red line Stock Price (SP) above the Black line Risk Price (SF) and for no other reason.

It’s also one of those benighted companies in which the price of risk and the stock price track each other, indicating a kind of stasis (the Nash Equilibrium) between risk seeking and risk averse investors which is difficult for “shareholder activists” to disturb because these shareholders are willing to buy and hold the stock at those prices which (provably) indicates that an investment in the stock of Mondelez International is already as good as cash and better than money. What else should we want from an investment, especially large portfolios of them worth 100’s of millions and even billions without a problem.

And the stock price is up +20% on the year, but our cash isn’t (although we don’t know the future). The company also pays a dividend of $0.14 per share per quarter for a total payout of $1 billion per year to its shareholders and a current yield of 1.8%, and our estimate of the downside due to the demonstrated volatility of the stock price is minus ($5) per share so that it could be trading between the current $30 and $25 to $35 without surprise.

But we know how to deal with surprise.

Exhibit 1: (B)(N) MDLZ Mondelez International – Risk Price Chart

(B)(N) MDLZ Mondelez International Incorporated - August 2013

(B)(N) MDLZ Mondelez International Incorporated – August 2013

Mondelez International Incorporated manufactures confectionery products. It produces packaged food products, including biscuits, confectionery, beverages, cheese, convenient meals and various packaged grocery products.

(Please Click on the Chart to make it larger if required.)

From the Company: Mondelez International Incorporated together with its subsidiaries, manufactures and markets snack food and beverage products worldwide. The company offers biscuits, including cookies, crackers, and salted snacks; confectionery products, such as chocolates, gums, and candies; powdered beverages and coffee; and cheese and grocery products. Its primary brand portfolio includes Oreo, Nabisco, and LU branded biscuits; Milka, Cadbury Dairy Milk, and Cadbury branded chocolates; Trident branded gums; Jacobs branded coffee; and Tang branded powdered beverages. The company sells its products to supermarket chains, wholesalers, supercenters, club stores, mass merchandisers, distributors, convenience stores, gasoline stations, drug stores, value stores, and other retail food outlets directly, as well as through independent sales offices and agents. The company was formerly known as Kraft Foods Inc. and changed its name to Mondelez International, Inc. in October 2012. Mondelez International, Inc. was incorporated in 2000 , has over 100,000 employees, and is headquartered in Deerfield, Illinois.


We are The RiskWerk Company and care not a jot for mutual funds, hedge funds, “alternative investments”, the “risk/reward equation” and every other unprovable artifact of investment lore. We have just one product

The Perpetual Bond™“
Alpha-smart with 100% Capital Safety and 100% Liquidity”
With No Fees and No Loads on Capital

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Investing in the bond and stock markets has become a highly regulated and litigious industry but despite that, there remains only one effective rule and that is caveat emptor or “buyer beware”. Nothing that we say should be construed by any person as advice or a recommendation to buy, sell, hold or avoid the common stock or bonds of any public company at any time for any purpose. That is the law and we fully support and respect that law and regulation in every jurisdiction without exception and without qualification to the best of our knowledge and ability. We can only tell you what we do and why we do it or have done it and we know nothing at all about the future or the future of stock prices of any company nor why they are what they are, now. The author retains all copyrights to his works in this blog and on this website. The Perpetual Bond®™ is a registered trademark and patented technology of The RiskWerk Company and RiskWerk Limited (“Company”) . The Canada Pension Bond®™ and The Medina Bond®™ are registered trademarks or trademarks of the Company as are the words and phrases “Alpha-smart”, “100% Capital Safety”, “100% Liquidity”, ”price of risk”, “risk price”, and the symbols “(B)”, “(N)” and N*.

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