Ok, one lawsuit/investigation/class action action against a company is bad news, usually, for a stock.
Two, though? Time to say, Move along. Especially when the company in question shows a remarkable ability to keep getting sued for the same practices.
Back in April 2019 four of the largest U.S. beef-packing companies were accused of violating federal antitrust law by conspiring to drive down prices they paid ranchers for cattle, even as retail beef prices hovered near record levels. In the suit brought by Ranchers Cattlemen Action Legal Fund United Stockgrowers of America and four cattle-feeding ranchers Tyson Foods (TSN), Cargill, JBS USA (the U.S. unit of Brazil’s JBS) and National Beef Packing Co were accused of colluding since January 2015 to suppress the price of cattle raised for beef production. Troublingly, the complaint resembles litigation filed in the same Chicago court in in which companies, including Tyson and JBS, have been accused of conspiring to fix prices of broiler chickens and pork.
Back in July 2019 when I bought shares of Tyson Foods for my long-term 50 Stocks Portfolio I decided that Tyson’s upcoming participation in the plant-based “meat” craze out weighed these allegations. At least as far as a likely gain in the stock went.
Then in September a class-action lawsuit filed in U.S. District Court for the District of Maryland accused 18 poultry processors, including Tyson Foods, Perdue Farms, Sanderson Farms, Pilgrim’s Pride Corp. and Case Foods, of conspiring to fix and depress wages and other compensation paid to hundreds of thousands of workers since 2009. Agri Stats. and Webber, Meng, Sahl and Company were also are named as defendants for allegedly facilitating the exchange of compensation data. Tyson has a long history of wage violations. For example, in 2009 the company was found to be in violation of the Fair Labor Standards Act in an action brought by the Department of Labor. In 2011 Tyson settled a $32 million lawsuit brought by 17,000 Tyson poultry workers in an effort to get paid for work already performed.
I’m selling Tyson Foods out of my 50 Stocks Portfolio on Tuesday, October 1. The stock is up 8.86% as of the close on September 30 since I added it to the portfolio on July 16, 2019.
I’ll be looking for another way to invest in the the plant-based meat sector.