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Kim Butler

Partners for Prosperity, Inc.

City:Mt. Enterprise

State: TX

I have 20+ years of handling alternative investments in cash, growth and income for clients nationwide.  I strive to help my clients with all things financial in every way possible over the phone and the web.  I own an alpaca farm which I enjoy working during my downtime.  I also enjoy gardening, writing and reading books.  I also train other advisors on Prosperity Economics.

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Alternative Investments--A Piece of Cake?

Are we headed for a Twinkie bubble?

| BY Donald Liebenson

Twinkies’ sponge cake is golden, but is the endangered iconic snack treat golden as an alternative investment? Some enterprising entrepreneurs are looking to make a tasty profit on the increasingly scarce commodity.

There has been a run on Twinkies since Hostess Brands announced at the end of last week that it would be going out of business, resulting in the loss of a reported 18,500 jobs. “We were sold out by 9.a.m. Friday,” a store manager for a Chicago-area Jewel-Osco store told Millionaire Corner.

Twinkies, created in 1930, are embedded in the American popular culture. Though nutritionally suspect, they are the quintessential so-called "junk food." One was included in a millennial time capsule that also included a photo of Rosa Parks, a piece of the berlin Wall, and film of Neil Armstrong walking on the moon.

With grocery and convenience store shelves bereft, demand for Twinkies has intensified, leaving savvy speculators to feed off snackers’ withdrawal pains. Log on to eBay and you’ll find one unopened box of Twinkies up for auction for $10,000,000 “delivered by van with your company logo displayed on it.”

Meanwhile, back in the real world, some people are indeed getting a little fatter financially on Twinkies. One woman reportedly turned a $50 investment (20 boxes) into a $295 profit. Bids for another seller’s five boxes reached $500.

Driving Twinkie-mania for the moment is this exclamation by one eBay seller: “Hostess went (bankrupt) and this will not be sold in stores any longer.” But are we headed for a Twinkie bubble?

In the first place, analysts believe that the indestructible Twinkie with its legendary long shelf life (Hostess claims 25 days; others say decades) will be back. As tempting as a Twinkie, Ho-Ho, Zinger, Cupcake or other popular Hostess products, is the company’s annual revenue of $2.5 billion plus its high brand recognition. Twinkies alone have brought in $68 million this year, The Washington Post reports.

Various reports say that Con Agra, Flowers Foods, which makes Nature’s Own bread, Metropoulos & Co, which owns Pabst Brewing Co., and Mexican company El Grupo, the largest bread-baking company in the world, are likely suitors.

Until then, though, how will people get their Twinkie fix? Enter the Twinkie traders. As alternative investments go, however, it might, like Twinkies themselves, leave them a little queasy.  Alternative investments--products other than stocks, bonds or cash – add valuable diversification to a portfolio. “If you limit your portfolio to traditional investments, they will be tied to fluctuations in the stock market, Ed Meek, CPM™ and founder of Edge Portfolio Management in Illinois, recently told Millionaire Corner.

Alternative investments include commodities, mutual funds, real estate, precious metals, collectibles, and coins. But Twinkies? That might be leave a bad aftertaste for those looking to cook up a get-rich-quick strategy  as news of the snack food’s fortunes becomes less dire than initially reported.

But let’s play: the website Technorati whimsically envisions fantastic scenarios by which one could indeed enter the Millionaire’s Club on a cache of Twinkies. This presumes that they have gone the way of the Uh-Oh Oreo. Imagine, author Steve Woods posits, that you bought $100 worth of Twinkies 20-count boxes at the retail price. How much would these boxes be worth in, say, 2016. “Would your neighbors be willing to plunk down as much as $1,000 for a single pack of 20 Twinkies? he asks. “If so, yesterday’s $100 just banked you $14.285.”

That’s not exactly get-rich-quick and very high risk. These Twinkie hoarders may be biting off more than they can chew.

UPDATE: A bankruptcy judge Monday ordered Hostess Brands Inc. and its second largest union to go into mediation to try and resolve their differences.

About the Author

Donald Liebenson

Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.  

A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.