Photographer: Chris Ratcliffe/Bloomberg

Ackman’s Bet on Frozen Food Surges Thanks to Fish Sticks

  • Nomad Foods goes from sector’s loser to outperformer
  • Could now target acquisitions outside of Europe, CEO says

If you held a stake in Nomad Foods Ltd seven months ago, your investment would have been losing more money than any other consumer staple company in Europe.

Today, the Feltham, U.K.-based frozen food-focused investment vehicle backed by Bill Ackman boasts a 12-month return of more than double the average of its European peers’, and has outperformed the U.S. market by around 10 percent since the start of 2017.

Nomad’s best-known brand in Britain is Birds Eye, the maker of breaded rectangular cod portions known as fish fingers, and sales in the childhood dinner favorite are thriving.

“Eighteen fish fingers are eaten every second across the U.K.,” a spokesman for Birds Eye said, adding that the product has seen a 7 percent sales growth over the last year.

That increase has coincided with a rising number of British pubs listing fish fingers on their menus, usually served smothered in tartar sauce and wedged between slices of bread. The trend has been attributed to a combination of gentrification and a demand for infancy nostalgia.

Fish-finger inventor and Birds Eye’s founder Clarence Birdseye “changed the way we eat,” according to biographer Mark Kurlansky, when he replicated the flash-freezing methods of Inuits he observed in the sub-zero temperatures of Canada’s Atlantic coast a century ago.

Non-European Acquisitions

Nomad, set-up by hedge fund manager Noam Gottesman and Jarden Corp co-founder Martin E. Franklin, sold shares on the London Stock Exchange in April 2014 before switching its listing to New York just under two years later. Bill Ackman’s Pershing Square currently has an 18.3 percent holding, according to data compiled by Bloomberg.

Nomad now has a 14 percent share of the entire Western European frozen food market, excluding ice cream. However, the company’s takeovers could soon begin to stray outside of the continent.

“While we believe further consolidation of European frozen food is highly synergistic, our acquisition criteria is not limited by geography,” Chief Executive Stefan Descheemaeker said in emailed comments. The firm is likely to target companies with existing brand recognition such as its Birds Eye, Iglo and Findus units, Descheemaeker added.


Nomad is poised to see margin improvement and accelerated earnings growth over the next two years, Suntrust analyst Bill Chappell wrote in a note to clients on April 5.

“Missteps” by previous management led to the stock’s previous lackluster returns, Chappell said, giving the company a Buy rating. The consensus rating of six analysts compiled by Bloomberg is 4.8 out of 5.

Nomad reported fourth quarter earnings below the average analyst estimate compiled by Bloomberg on March 30, but the stock rose as much as 4 percent on the day. The numbers were a “hiccup,” Chappell concluded, adding that he expects investors to take notice of Nomad’s attractive valuation over the coming quarters.

Nomad announced a debt refinancing Friday, with Moody’s subsequently affirming its B1 credit rating. However, analyst Eric Kang expressed some concern over the company’s proposals to increase prices in order to mitigate the impact of the weaker pound since the Brexit vote.

“Moody’s views the impact on volumes as uncertain because this could encourage consumers to switch to cheaper alternatives such as private labels,” Kang wrote.

— With assistance by Joshua Fineman, Hannah Benjamin, and Kiel Porter

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