Portfolio managers could be better growth stock pickers if they made less money.
That's the only conclusion I could reach from devouring Suzanne Kapner's piece on Tuesday about the perils of investing in the natural foods supermarket stocks.
These stocks, big winners early last year, have now completed ten straight months of horrendous underperformance; and it ain't getting any better.
I've been watching this group from the sidelines for a while, but I must admit that I almost bit, and bit big, when they opened a Fresh Fields nearby me, in Millburn, New Jersey.
Part of my interest stemmed from the ownership of Fresh Fields, a company that flirted with going public before it was purchased by Whole Foods late last year. Mark Ordan, who helped recruit me for Goldman Sachs when I got out of law school was running the company, and Ordan is a hitter, a no-nonsense guy who knows how to make money.
But mostly my interest came from the great-looking produce and fabulous prepared foods, all of which were mouth-watering. I had fallen for one of these high-end food retailers before, Bildner's, in the mid-80s, an upscale chain of prepared foods and groceries that opened up a block away from me during my swinging single 80s days.
Now I was about to fall again. But this time I went first to my mind-the-purse-strings wife, who is not schooled in the ways of price insensitivity that overcomes so many of us on Wall Street.
I asked her to check it out, because if she liked Fresh Fields maybe I should take a good hard look at Whole Foods. She looked and sure enough she came back and told me that the stuff looked great, but that it was too expensive, that the regular supermarket had organic food for less and it looked almost as good.
More important, she said to me, that the prepared foods I was ogling were much too expensive for her tastes and that nobody in his or her right mind outside of a Wall Street fat cat would pay for them.
A sobering dose of cold water on all of those analysts reports no doubt written also by someone as price insensitive as I.
Anyway, I stayed away and sure enough Whole Foods has since blown up twice already. Why? The analysts claim it is sloppy execution and merger hiccups. I think that's nonsense. The regular supermarkets are now wise to the hot items at these stores and they can reproduce them in volume for less price. And, during the greatest economic expansion of all time, people are still value-conscious at the supermarket, and these guys offer no value.
In the meantime nobody is willing to spend that kind of money buying prepared foods. Until my wife says they can come under a Big Mac Fries and Diet Coke (Value meal number 4 in my nomenclature)--"supersized" as we fast food cognoscenti say, I'm passing.
James Cramer is manager of hedge fund and co-chairman of The Street. While he cannot provide individual investment advice or recommendations, he welcomes feedback, emailed to Jjcramerco@aol.com.