HLF Chart, page-111

The cyclicality of the ASX F&B sector that @wenty has referred to will be linked to many factors including (but not limited to) the prevailing interest rate, energy prices, the AUD/USD rate and the Food Price Index.

Traditionally, consumer staples perform best in periods of rising interest rates, alongside other defensives such as utilities. Whereas consumer discretionary is more likely to underperform in periods of rising interest rates.

The added complexity is that HLF is also a young (3 years post IPO) growth stock and growth stocks don’t necessarily underperform whenever rates are rising, but they are more susceptible to underperform when there is uncertainty about the duration and magnitude of a cycle of rate increases. This is because the majority of a growth stock's value (profits) is derived from distant cash flows, rather than cash flows generated today.

As to the timing of a sector-wide F&B downtrend — historically, the last 3 downtrends have lasted 1.5 years on average: a) Jan-2002 to June-2003, b) Aug-2007 to March-2009 and c) April-2013 to Sept-2014. The current downtrend has already lasted 2.75 years having peaked in July 2019.

P.S. VC now has circa 2.7m units remaining and is finally no longer in the Top 10 HLF shareholders, having sold over 2m units since my last update. This alone will help ease selling pressure once the figure reaches 0.