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A Beyond Meat Conundrum

|About: Beyond Meat, Inc. (BYND), NSRGY

My wife scored a huge win by investing in Beyond Meat a few months ago.

I want to get her to dump the stock and put the proceeds into a competing company that is better established, that is profitable, and that pays a dividend.

When it comes to investing, the real money is made over very long periods of time by reinvesting dividends.

Accurately can it be said that the propensity of an investor to make money correlates inversely to the speed with which they hope to make it. 

Let me tell you about my present conundrum. You see, my wife (widely known amongst her friends and family as "Mrs. Pancake" or, more selectively known as simply "The Girl") purchased about $1,000 worth of shares of Beyond Meat (BYND) shortly after the IPO. We'd tasted Beyond Meat products (she actually brought some patties and sausages from the USA back to Portugal in a refrigerated bag), and we loved them. After an exhaustive but unsurprising search, we could not (and still cannot) find anywhere to buy Beyond Meat products in Portugal. So she opted to buy the next best thing to raw plant protein: shares of BYND stock. In a ROTH IRA, no less. 

Needless to say, The Girl's profits have soared at a rate many, many times higher than anything I have ever earned on any investments that I have ever selected for the family in any given year over the past 20 years. She's booked a 142% gain in three months, and still the stock keeps climbing. 

Now, I might come across as peevish or unsportsmanlike, but I'll be honest with you. I could care less about a gain of 142% in 3 months. Do you know why? It's because what gets me out of bed each morning is the prospect of bagging a 41,162,200% gain - even if that means waiting around for 148 years (I exercise and don't smoke). What attracts me to that 41,162,200% gain is not simply that it is a big number, but also the fact that it's lead pipe simple to achieve. According to all the S&P500 data from the past 148 years, that's the return an investor would achieve for simply buying an S&P500 index fund and reinvesting all the dividends for 148 straight years. Historical S&P500 Returns Since 1871. While that comes to a 9% annual rate of return, it represents an AVERAGE annual return of nearly 69,530% every three months, in comparison to which a 142% return on a stock like BYND amounts to what those old Vitalis TV commercials referred to as "that greasy kid stuff." 

Granted, one does not actually see anything like that average return for the first 100 years, but like I said before. The big money, I mean, the REALLY BIG money, comes over extremely long horizons and not before, and is far, far, far more likely to materialize than the middling, wimpy 100+% return you might be lucky (or skillful) enough to land by picking a one-off three month high-flyer. 

But as you know, the key to making the really big money (the ONLY key) is reinvesting dividends. Beyond Meat has never paid, does not pay, and has no immediate prospects of ever paying, a dividend... thereby obviating any possibility of pumping warm humid air into that compound return hurricane that a doting husband, such as myself, yearns to unleash on the otherwise tranquil waters of his loving wife's ROTH IRA. 

Let it be observed that older, larger companies with more expansive and developed distribution networks have their own competing plant-based protein products coming to market. Companies such as Nestle (OTCPK:NSRGY), which has produced a cascade of steady and generally rising profits since 1866, has only just started with the launch of it's very own plant-based burgers called the "Incredible Burger" (not to be mistaken with "Impossible Burger", a privately-held startup that also competes voraciously with Beyond Meat). The competition for market share in plant-based meat replacement products hasn't even started yet, but oh, it will and when it does.....

And might I just point out that unlike Nestle, Beyond Meat, throughout it's very short lifespan, has never earned so much as one penny of profit? A reader once wrote that if it doesn't earn money, it can't be called a "business."

Don't even get me started on valuation. For starters, NSRGY actually HAS a PE ratio (equal to about 30 per share according to Nestle PE ), whereas BYND is priced on literally nothing more than a hope and a prayer (to say nothing of the recent short squeeze induced by a share lockup that will, as it happens, expire this November, potentially unleashing an avalanche of BYND stock onto a market with as yet uncertain demand for the shares). Technically, I suppose you could say that Beyond Meat has a PE ratio. It clocks in at negative 326 as of this moment. How often do you see a chart like this one I just pulled off CNBC?

So I ask you. Why shouldn't The Girl collect her $1,000+ profit (tax-free), and roll the gains into shares of NSRGY (tax-free), start collecting dividends (tax-free) that she can reinvest (tax-free) into more shares of whatever, and thereby unleash the simple yet efficacious monster of compound income growth in her (tax-free) accounts? 

The question that arises, however, is this: how does one convince The Girl to dump her BYND shares and roll into NSRGY? I see you there, in the corner, raising your hand.

"Buy her a coquettish designer handbag with a whimsical leather bow."

Nice try. Let me explain something to you about The Girl. She's spent the better part of a week engineering a custom cat litter box with sufficient heft and depth to accommodate the leavings of a full-grown, well-fed, 30 pound African serval.  Get the picture? Suffice it to say that coquettish designer handbags with whimsical leather bows don't carry much weight around these parts (and might just get chewed up by a certain large feline that we live with).

You. Over there.

"How about a box of chocolates?"

Answer: she buys those for herself routinely. Sorry. You. Over there.

"Buy her a badminton set!"

Uhhhhh, yeah. Sure. Maybe it's time we cut this conversation off. I actually have a novel, slightly strange concept that I might try. It's actually something I experimented with for the first time a while ago, the efficacy of which left me, quite frankly, utterly flabbergasted. So much so, in fact, that I would commend any of the other husbands out there to try it out at home with their own wives. Imagine this: doing what she says. Kind of a quirky idea, right? I don't know why it took me 30 years to come up with this "aha" moment.  You see, like most other adoring husbands, I typically make a point of NOT doing what The Girl asks (although my reasoning for which escapes me, at the moment). Her reaction when I do what she says is surprising to me, for she seems to react in a highly favorable way. All the more so when I avoid protesting or making counter-offers, or observations that begin with the phrase "well, another thing I could do instead is ________". 

So that is my plan. Do as The Girl asks for some limited period of time, and then, once she is in a fine frame of mind, broach the awkward subject of dumping her BYND stock at a truly fabulous gain and transforming that free nugget of free capital into a lifetime of free and steadily growing dividends with shares of a cheaper, better established competitor with a far longer track record for rising profits. 

Big, stupid and easy. That's the kind of man I like to be, and also how I like to earn money on the stock market. Now if I can just cajole her into dumping BYND.....

Disclosure: I am/we are long BYND, NSRGY.

Additional disclosure: This is not investment advice and I am not an investment advisor. I'm a desperate husband, is all. Languishing under the shadow of a roaring capital gain in stock that I'd just assume spit out, wrap discretely into a paper napkin and slide under the placemat while the other guests aren't looking.