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New York CNN —
The founder and CEO of Chobani, a company that quickly captured more than 20% of the US yogurt market, has a clear mission: He wants to prove that capitalism and humanitarianism feed off of each other.
Hamdi Ulukaya, a Turkish-born entrepreneur, says his company is proof that those principles work.
He has donated millions of dollars to fight food insecurity and to disaster relief efforts around the world. Chobani is also a part of the Tent Coalition for Refugees in the US, which advocates for the hiring and training of refugees across the country. As Ulukaya told potential investors in an initial public offering filing in 2021, Chobani “operates on a simple fundamental principle, that we do well by doing good.”
But questions remain about whether it’s possible to focus on the greater good while catering to shareholders who demand ever-widening profit margins.
Chobani was slated to go public in 2022 but withdrew its filing as market conditions deteriorated. In a discussion with CNN, Ulukaya said the company still has plans to go public when market conditions stabilize.
Before the Bell sat down with Ulukaya at the Global Inclusive Growth Summit in Washington DC to discuss corporate responsibility, his economic outlook and more.
Single-serve Chobani® products, including Chobani® Flip®, Probiotic, Complete, Less Sugar, Chobani® with Zero Sugar and Greek Yogurt are seen on the shelf at a local grocery store on August 12, 2021 in New York City.
This interview has been edited for length and clarity.
Before the Bell: There’s an innate idea that humanitarianism and capitalism are separate entities. How do you combine the two?
Hamdi Ulukaya: The capitalistic view is that the core purpose of business is to create value for the shareholders. But if you look at it from another dimension, and this was the prevailing view before the 1970s, the core purpose of business is to create value for all shareholders. That includes workers, your community and the world altogether.
The only way to get people on board with that perspective is to convince them that it’s good for business. When you meaningfully get involved, it becomes an enormous engine for your company. But how do you convince a company that only focuses primarily on profits to broaden its focus? That’s the biggest challenge.
The concept of greedflation has been in the news lately, that’s when companies use the cover of inflation to unnecessarily raise prices and increase their profit margins. Is it a real problem?
I make food, and I’m looking at the costs — where it was six months ago, where it was one year ago and where it is today. It’s the same perspective, that the prices are still high out there.
You do see some selfish acts and it seems like it’s all unified somehow. Of course you have to pass on some increases in prices to customers, but those inputs are coming back down and that hasn’t been reflected in the price of goods: They’re still elevated. It is troubling. I think food makers have to be very conscious that people are having a hard time affording food.
I want to believe that the employees of these companies want to do the right thing. I wonder if they’re succumbing to financial market pressures that demand they show growth and strong metrics.
Are there IPO plans on the horizon for Chobani and if so, how will you navigate pressures from shareholders to do the same?
We’ve passed $2 billion in sales and we’re growing 20% to 25% year-over-year. We don’t have any external pressure or demand to go public. There is no cash-out scenario.
That being said, we have a few reasons we want to go public. One is our 2,000 employees — they have shares and I want them to have access to that money [Ulukaya has given his employees shares of the company worth up to 10% of Chobani’s total value]. The second is we want our manufacturing to grow, product-wise and geographically. So this is not an exit. But if going public is going to fuel our journey then I welcome it.
The year we were supposed to IPO was very loud, very crowded and there were a lot of moving parts. It didn’t look good and we thought it might damage our journey so we decided to stop it. But we are OK to be in the public market. I think people understand what Chobani is all about and they understand that this is tomorrow’s brand and tomorrow’s company. I think the external conditions need to be settled, and we will reevaluate, but still I’m really open to it.
Sell in May and go away?
“Sell in May and go away,” says the old Wall Street adage.
But this year, it might not be so prudent to heed that piece of advice, wrote CFRA’s Sam Stovall in a recent note. Instead he recommends that investors “rotate but don’t retreat.”
What’s happening: November through April are typically the strongest six months of the year price returns for the S&P 500, said Stovall. The May through October average, meanwhile, has “historically been anemic,” he said.
The upcoming presidential cycle could elevate that trend, said Stovall.
In the year before elections, starting from 1945, he found that the market grew by an average 14.3% between November and April and rose in price 95% of the time. Stocks had a more difficult period in the six months that followed, gaining just 2% on average and rising in price 63% of the time.
Rotation is key: Stovall created a hypothetical portfolio that had an equal exposure to the consumer discretionary, industrials, materials and technology sectors between November and April — and then rotated to more defensive sectors (consumer staples and health) between May and October.
If an investor held that same portfolio between April 1990 and April 2023 they “saw higher relative returns, lower volatility, and a 70% frequency of beating its benchmark,” said Stovall.
But as always, past performance is no guarantee of future results, he added.
Fed report details missteps that led to SVB’s collapse
The Federal Reserve on Friday released a review of the events leading to Silicon Valley Bank’s collapse last month.
In the report, the Federal Reserve admits responsibility for not understanding the extent of the risk that SVB undertook, as well as failing to urge the bank to fix its problems in a timely manner.
“Regulatory standards for SVB were too low, the supervision of SVB did not work with sufficient force and urgency, and contagion from the firm’s failure posed systemic consequences not contemplated by the Federal Reserve’s tailoring framework,” the Fed report stated.
The report also recommended a re-evaluation of the Fed’s regulatory and supervisory functions.
Michael Barr, the Fed’s vice chair for supervision, said that external reviews of SVB’s collapse, including from federal lawmakers, are welcome.
