Colgate-Palmolive Drops on Triclosan

Colgate-Palmolive ($CL) is one of my favorite boring stocks. The shares usually don’t move around much. Lately, however, CL has badly lagged the market.

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That may not seem like a lot but it’s a big deal for Colgate.

What’s going on? It’s hard to say exactly what event causes a certain move, but it appears that investors may be freaked out by triclosan. Or as Newsweek phrased it, “Is Cancer Lurking in Your Toothpaste?”

Triclosan is a chlorinated aromatic compound: very basically, two benzene rings (a sturdy hydrocarbon, with six atoms of carbon and hydrogen each) linked by an oxygen atom, with three chlorine atoms protruding like spokes, as well as a lone hydroxyl group (oxygen + hydrogen). First used in the 1970s in hospitals, it has since become a widespread antimicrobial agent. Not only is triclosan present in Colgate Total and many household soaps, but it can also be found in coolers, odor-protected shoes and makeup, according to Mae Wu, a lawyer with the Natural Resources Defense Council. She says that triclosan is “all over the place,” even if, as she notes, we had “been doing fine without it” for several centuries of human-microbial cohabitation of the planet.

“Triclosan is 110 percent marketing,” says Michael Osterholm, who heads the Center for Infectious Disease Research and Policy at the University of Minnesota. Osterholm, who helped Minnesota become the first state to ban most uses of triclosan. He told me the compound has been superseded by superior, safer antimicrobial agents, and Procter and Gamble has begun advertising its Crest toothpaste as being “100% triclosan free.” That may also be a triumph of marketing, but one that could lead more people to question the presence of triclosan in household items, thereby forcing Colgate’s hand.

I confess that I don’t know anything about triclosan or its effects, but I do know something investor behavior. They like to sell first and look for facts later. I’m always on the lookout for opportunities when good companies run into fixable problems.

Posted by on September 8th, 2014 at 3:04 pm


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