S-O-S

We have, over the two years and a few months this blog has been in operation, taken the occasional shot at dominant olive oil bottler, Grupo SOS, and have been short the stock a couple of times - with profitable, but less than stellar, results as the magic hand of the efficient market always intervened to keep its price at multiples several times those typical of the industry. The last time, we reversed our 12€ sale when sudden, but not unexpected support appeared just under 10. The reader can see the ensuing spike, conveniently camouflaged as it was at the time by late October's chaos.

No regrets in that regard, but we certainly would have liked to be on board for today's 38.5% drubbing.

Behind this event was the release of 2008 results. Self-rated as positive by the company itself, the fact of the matter is that they got killed by a health scare and high producer prices (against which they seem to have 'hedged' by overbuying near the peak) in their sunflower oil line. Olive oil sales, despite the lipstick they attempt to put on the pig, have been sluggish and only so with huge price reductions. In the final calculation, operating profits are off 56% just as the company has taken on 200 million euros in new debt to finance their very expensive purchase of parts of the Bertolli brand from Unilever.

Very pissed off will be the four Andalusian cajas de ahorros that own about 35% of the company. But not near as much so as Caja Madrid, which in mid-January sunk 149 million into a new issue intended to finance the takeover of the Italian bottler. Bought at the bargain price of 7€ per share when SOS was trading near 11 on the bolsa, today's 4.92 close puts the Madrid savings bank about 35% in the hole on that brilliant move.

What we'd like to see is a CDS quote for SOS' debt.

We'll be in Madrid for the next couple of weeks for Mrs. Salad to get some repair work done on her hip. Depending on the state of internet access where we are staying, posting may be spotty.

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