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July 12, 2012  Thu 8:15 AM CT

PEP: SEE CHART GET CHAIN FIND STRATEGIES
Sometimes I get so frustrated with companies that hedge.

They hedge the currency. They hedge the raw costs. They take away so much of the upside. I often think that the bankers talked them into the programs, programs that only bankers seem to win.

Lately, though, I have seen some value in hedging--and some worries about what happens when you don't.

We've seen a dramatic rise in the grain complex, for example, and you might think it is intelligent then to sell PepsiCo and General Mills, two huge buyers of grains. I know I have been expecting a big increase in earnings as the grains broke down, which they had earlier in the year. When I didn't get it, I felt cheated out of a great investing opportunity.

Now that it cuts the other way, all I can say is thank heavens that chief executives Indra Nooyi at Pepsi and Ken Powell at General Mills hedge those costs. You could have had instant shortfalls.

And the other side, the currency? Look at Google today. It's getting slammed, in part because it has huge exposure to European business and Bernstein is out with research saying that the strong dollar will hurt GOOG. Cummins said the same thing yesterday. Boy, would you ever love to see that currency risk somehow hedged out.

The bottom line? Be careful what you wish for. The fickle nature of grains and currencies is playing havoc right now with big business, and the ones that have taken action to hedge are winners.

The ones that haven't are getting hammered.

Disclosure: Cramer's charitable trust is long GIS.
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