Jeffrey Gundlach, the investor who founded DoubleLine Capital and is best known as the bond king, saw an ad which makes him think the economy isn’t doing well.
Those who grow up in the 1980s remember the scene in National Lampoon’s Vacation, where Cousin Eddie (Randy Quaid) says, “I don’t know why they call it Hamburger Helper, it does just fine by itself.”
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The product, which dates back to the 1970s, was acquired in a 2022 deal by Eagle Family Food Group from General Mills for $610 million, in which it also received the Suddenly Salad business.
The two businesses in 2021 had sales of $235 million, but Eagle Foods, which is owned by private equity firm Kelso & Company, is trying to revive the brand. This year the Cleveland company reintroduced the Hamburger Helper’s glove mascot, Lefty.
So what Gundlach noticed is less an economic indicator and more a sign of a private-equity fueled company trying to drive growth for a sale or initial public offering later.
He might not be right about the economy, either — which he could’ve learned from his colleagues. DoubleLine’s Andrew Hsu and Michael Fine, in a September report, examined asset-backed securities for data on the health of the U.S. consumer.
DoubleLine’s own proprietary data on personal loans shows that asset-backed securities collateral from the 2023 and 2024 vintages is displaying better loss performance to the 2022 and 2021 vintages. The persistence of low mortgage delinquencies suggests homeowners are in a relatively strong position, though they note credit-card delinquencies have been on the rise, as well as auto loan delinquencies.
“Consumer resilience is likely fueled by the strength of the residential mortgage market, a robust labor market and the excess savings accumulated during the pandemic,” they concluded. They did acknowledge risks including the depletion of the savings, wage stagnation, the rise in unemployment and ongoing high prices.
