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Just spoke to someone who attended the annual meeting of G. Willi-Food International, Ltd. (NASDAQ:WILC) . During the meeting, management’s contract for the next three years was up for election. In the past weeks, minority votes were questioning the approval of the plan claiming that management is not being shareholder friendly. During the meeting, management expressed its devotion to create shareholder value and to prove that the stock is undervalued - including the announcement of a recent repurchase plan. Management claimed that they were open to any and all suggestions for getting the stock to reflect the full value of the business, including dividends in addition to the repurchase. At the end, after finishing with a positive note for the future, the vote was taken and the shareholders voted full confidence in management.

G. Willi-Food International is Israel's largest food importer and also distributes food in the United States (revenue 80% Israel, 20% U.S.). Currently, and for the foreseeable future, WILC’s profile has been changed and it is growing organically at 15% as a result of an entry into dairy and refrigerated salad products. The company has more than $4 net cash per share and an earnings estimate of 80 cents for 2011, which makes the Ex cash P/E equal to 3x.

What else good do you need to know about a food company trading at 3.8x LTM earnings (ex-cash) growing the top line organically at 15%?

  • Gross margins are high for the segment: The decision to get into dairy products has also been a huge boon to margins. GM 3Q'10 was 29%. Management believes that margins are sustainable in the high 20s.
  • Earnings power is well in excess of previous years: WILC earned $0.62 last year and is on target to earn $0.75 in 2011.
  • Private-label Mediterranean salads demand in U.S. will be a big LT business driver: Since Strauss (the largest Israeli food company) sold a 50% stake in its Sabra (the refrigerated humus and med salads you see in every store with the red tops) business to Pepsi (NYSE:PEP) there has been large growth in this category and all of the large U.S. supermarkets are searching for private label. WILC is one of the top companies that can provide this.

So why does the stock trade here?

This company is small and illiquid and is simply not on anyone's radar (yet). Only 13.5mm shares are outstanding for a MC of less than $100MM with 53% owned by an Israeli publicly traded investment co (WLFD) controlled by management. To wit, the recent press release that management had acquired a block of stock 3.6% above the market in a private transaction was greeted with 40k shares of trading and a stock that was flat on the day (you don't see press releases for small cap stocks you don't know about!).

Source: Willi Food's Annual Meeting: Upbeat For Good Reason