Innovative Food Holdings Inc (IVFH)

[smit0745]

Chefs warehouse grew their top line at around 35% year over year last quarter. Only 8% of that growth was organic. Hence, they are growing through acquisitions.

Chefs warehouse is currently valued, based in part, on the expectation that they are going to grow their revenue about 33% in the upcoming quarter (from the q4 last year). Considering the 8% organic growth figure from the most recent quarter, logic says they are going to have to keep acquiring other companies in the very near future to meet these lofty revenue growth targets.

Their most recent earnings call transcript even contains direct quotations talking about increasing M&A before the year end. It just freed up some capital from a stock offering...

The call transcript is very informative and I suggest people should take a look at it.

http://seekingalpha.com/article/1796472-chefs-warehouses-ceo-discusses-q3-2013-results-earnings-call-transcript?source=yahoo

Another thing to note in this transcript is the size of potential acquisitions they are trying to make. They discuss potential acquisition characteristics multiple times throughout the transcript.

I wouldn't expect for it to be reasonable for IVFH to be valued similar to CHEF. They are different monsters in the fact that value would be unlocked in much different ways for shareholders. I think it is very reasonable however to think that IVFH should be valued at a level similar to the past acquisition multiples that CHEF has paid for companies. . . This roughly equates to IVFH being worth around $3.45 in my honest opinion.

I have a long position in IVFH.