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Three weeks ago I wrote an article titled "Sara Lee: Future Uncertain For This Food Company" about my investing history with this stock. With my tongue firmly implanted in my cheek, I wanted to title the article using a portion of their iconic jingle "Everybody doesn't like something, but nobody doesn't like Sara Lee." The Seeking Alpha editors chose the title based on my analysis of the company and, based on the news flow of the past week, I can only say that the SA editors were incredibly prescient in their choice.

I usually follow headlines on stocks on my watch list using Yahoo Finance. This is largely due to the fact that I am set in my ways, having used Yahoo for more than 20 years to set up various portfolios and track stocks. And, it's also nice to see titles of my articles published on Seeking Alpha show up under the detailed quote and headlines pages. But I am digressing just a bit.

In the past week the company has been the subject of a series of negative headlines and I almost missed most of them because I was busy the past few days. These headlines were pushed off the Yahoo summary quote page because of two largely unrelated announcements. Tyco (NYSE:TYC) announced another break-up of the company and several of the Tyco articles referenced Sara Lee's similar break-up. Also, Ralston Corp.- a company buying one of Sara Lee's businesses - once again rejected a bid by ConAgra (NYSE:CAG). It's a good thing for Sara Lee that these unrelated headlines quickly knocked some of the negative stories from the casual investor's focus.

The three headlines I am referring to relate to executive pay packages, an executive leaving and a credit rating change. On September 12th, Sara Lee issued a press release stating "Sara Lee Corp. Announces CJ Fraleigh, Chief Executive Officer, North America, Has Resigned From the Company" and this was followed the next day by an AP headline that read, "Fitch puts Sara Lee on rating watch" and a headline from TheStreet.com reading, "Sara Lee's CEO Gets 80% Pay Increase."

As I noted in the previous article, after Sara Lee rejected a takeover offer earlier this year, it announced it would be divesting more businesses, declaring a special $3 dividend, breaking the company into two businesses and spinning off the new company to shareholders in the first half of next year. Broadly speaking, Sara Lee will spin off the international beverage business, primarily coffee and tea, while keeping the Sara Lee, Hillshire Farm, Jimmy Dean and Ball Park brands.

Although the first headline uses the term "Resigned," another quote in the release makes it appear to me as though he was fired. There is the trite statement that he has resigned to "pursue other opportunities." Then there was this: "“CJ played an important role in taking the North American business to this stage in its development,” said Jan Bennink, executive chairman of the board of Sara Lee Corp. “We now believe that a different approach is needed to transition the North American business into a pure-play company.”" Fraleigh joined Sara Lee as CFO in October of 2009 and was promoted to the CEO in January of this year.

I'm not a big fan of such rapid changes, and I guess Fitch isn't either. The Fitch article noted, "Fitch said the "Rating Watch Evolving" tag means the company's ratings could be changed, given some uncertainty as the deal nears completion." With the Sara Lee credit rating sitting at BBB, I think we can be fairly certain that the evolving rating will not be a move higher.

The last headline about executive pay can't sit well with shareholders. The stock has not fared well lately, and the headline comes after second quarter results when earnings guidance was reduced.

In my prior article I noted I was long, re-investing dividends and I concluded :"Most recently (in mid-July), I sold the January 2012 $21.00 calls for $0.70. However, I see no reason to commit new funds to my position at this time. There are opportunities in other food companies that offer better yields and offer better growth prospects."

My holdings are the same, my view hasn't changed and I will devoting new funds allocated to the food and beverage sector to B&G Foods (NYSE:BGS).


Disclosure: I am long SLE, BGS. I have no positions in other companies identified in this article. I routinely open and close covered calls against my investment positions.

Source: Sara Lee's Rocky Week Can't Be Sitting Well With Shareholders