I write letters to the CEOs of companies whose shares I own, suggesting marketing strategies, acquisitions and new products based on some fundamental trend or opportunity. A shockingly high percentage of those CEOs have written back to me. I am reprinting the unanswered letters here in the event they were not seen.
February 1, 2016
Dear Mr. Farrell,
Here are a few ideas for driving growth at Church & Dwight in 2016 and beyond:
Buy The Female Health Company - This company is a one-trick pony (they make female condoms) and they've been punished for it. You can scoop them up for less than $40MM and I think you should. The obvious reason is that their FC2 condom is a complement to Trojan, but there's a much bigger opportunity to market products to women. Think about the name: The Female Health Company. There's so much that can be done with that concept. As a subsidiary, you can turn this company into a powerhouse and you can do a lot of good in the world. Women in developing countries don't have access to the basic hygienic products that we take for granted in the U.S.
Market and distribute a probiotic cure for bacterial vaginosis - Three million women in the U.S. suffer from bacterial vaginosis each year, and many have chronic infections. The amount of women looking for treatment options has skyrocketed (check Google Trends) and rightfully so: It's not practical or safe to take antibiotics regularly. The good news is that this condition can be treated orally using certain strains of Lactobacillus bacteria. The bad news (for women) is that the supply chain for probiotics stinks. Very few retailers pay attention to temperature control and the bacteria dies when it warms. You can strike gold by making it easy for women to order these probiotics and removing any fears about the product's efficacy. If you look at the number of cases in the U.S. annually and the cost of existing treatments, there is easily a $300MM market for this product and maybe much more. (What a great second act this would be for The Female Health Company!)
Develop baking soda filled shoe trees to prevent foot odor - I'm kind of amazed that this product doesn't exist already. Basically, take a cedar shoe tree and lop it in half. The spring loaded heel stays as is, but the toe of the shoe tree is replaced by molded bags of baking soda that snap into place and are easily released like the cartridge of a razor. Voilà! You're keeping the odor-causing Brevibacterium at bay and now you have a great replenishment business where customers buy two to four replacement heads each year for every pair of shoes they own.
Wishing you (and me) many happy returns this year,
John W. DeFeo
Seeking Alpha Articles by John W. DeFeo:
- 10 Dividend Growth Stocks To Buy And Hold Forever
- This 81-Year Old Mutual Fund Has Beaten The Market For Decades
- The Vanguard ETFs With The Highest Yields (After Taxes And Fees)
- Bitcoin Is Going to Crash, Eventually: Here's What Might Happen Next
Disclosure: I am/we are long CHD.
Additional disclosure: I do not own, nor do I have any business relationship with the The Female Health Company.