I think I can see where Happydad is coming from. Budreim is a...

I think I can see where Happydad is coming from. Budreim is a tough one to analyse.

It is definitely an interesting company, and I agree with Didak's assessment on the quality of their products. I sampled a couple of them last year, including the Macabella Crunch- so impressed was I that a few jars of these found their way into my end of year Christmas hampers.

But while I can find reason for optimism, my suspicion is that there may be some substance behind the selling.

One thing I note, for example, is that in the last financial year, 7.5% of the company revenue was from Frespac, the ginger business in Fiji. It does appear from some news reports that Cyclone Winston and the more recent flooding has caused some devastation to the Fiji agriculture industry. So would this have any impact on the Fiji ginger business?.

The second thing that I wonder about is the falling nut prices: walnut prices have crashed, as has the price of almonds. So far the macadamia price has held up well, but will it continue to defy gravity?. Historically nut prices have tended to move in roughly the same orbit.

Individuals have strong preferences for this nut or that, but commercial buyers are less fussy: A baker, for example, might note that the almond prices are now much lower than the macadamia prices, and so decides to bake less macadamia cookies and more almond cookies. This substitution effect means that nut prices have a tendency to converge.

Anyway, it remains to be seen. I probably wouldn't be worried about these issues if the debt level was a bit lower, debt has a great way of transforming molehills into mountains.