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    11 views53 pages

    150 255pages

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    Ricco Menezes

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    © All Rights Reserved
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    of 53
    EIGHT SHOPPING FOR STOCKS The Retail Sector Aer examining ay previous year's selestions and finding ve that inght be worth recommending apuin, 1 Bogan my seach for new selections in the usual fashion. T headed straight for my fsvorite Source f investment ides: the Burbngton Mall. “The Buingon Mall located 25 les trom my hometown of Marblehead. ITs the huge, covered variety of mall of which there sare only 450 oF sin the United States, ands delight amoxphere Jn which to study grea stocks,Pable companies on the way Upon the way down, om the way out, oF turing themselves around can be ivestigated ary day of the wek by both amateur and profesional sock shoppers. As an investment state), Ranging ou othe mall Is far superior to taking stocKbvokersadvioe on faith oF combINg the final pres forthe latest ts ‘May ofthe biggest gainers of al me come trom the places th nilions 6 consumer all the ime, An lavestment of $1080 mae in 1986 in each of four popular rea entrprses—Home Depot, the Limited, zhe Gap, and Wak Mart Store ane held or five years was worUh more than $50 st the end of 191 Driving wo the Burlington Mall akes me down a memory ine of ‘many other retailers 1¥e bought and wld i the past-—eyond behead pass two Resi Shacks (owned by Tandy--S10,000 invested {ere inthe early 1970s would hase resulted in «St millon hid you gotten out whea the stock peaked in 1982): 3 Toy eat from 25 cents to $36; a Kids “R™ Us; an Ames De Store, reminder that the howe stock can go ero; al LemsCraters, a large dnision whose problems were a drag on US. Shoe ‘Approaching Bullington from the north on Rowe 128—the source of many of te Tamous “gogo” tediology stocks of the {Del sch Polaroid and EG&G, when tis area was America’s ‘orginal Slicon Valley ext the thriway, Beyond the ext ramp, {pass «Howard Jobson’, gest growth lock im the 195: Fad Bll « wonderful stock uni Pepsi took over the company, and boost to Peps's earings since; a Chili's (with ts ebarming stook symbol, EAT), whic I missed i spite of my children’s recommen- dation booruse I thought to myself, "Who needs another Chis ‘ype restaurant?” "The parking lot ofthe Ruslington Mall it roughly the sce ofthe crite fown center of Marblehead, nd aways fall of cars, On the Gar end is car care center the advertises tres from Goodyear Sock I bought at $68 and den rereted, although lately W's come wack, “The main building isa tin he form ofa giant cross, anchored fo the east by Jordan Marsh and on the south By Flledes, both formerly owned by developer Kobert Campeau. Campeaa bounced into my ofce one day, fill of fects an figures about resins, and found his grasp of numbers so iypressve that 1 bought stock in his Campeau Corporation, another mistke. On the north there's [Lord &Teyor, now a cvision of May Department Stores, a great owth company ad on the west s Sears, which hi its high 20 years go ad has’ approached that summit since "Theis ofthe mal reminds me of ach! ten square, complete with ponds and park benches and large trees and a promenade of Tovesiruck teenagers ad te olde Instead ofthe one movie thea ter acing the path there's fourplex down the comidor nd instead ‘ofa drugstore, a hardware store, and a fve-and-ime tore are 160 ‘separ enterprises om two Roots of commercial space where people ‘can browse "But I n't think of it as browsing. I think of tas fundamental nal on the intriguing neap of potential ivesiments, arranged ‘Se by sie for the comenienor of sock shoppers Here are more Tey prospects than you could uncover in month of ivestment conferences i t 152 Peer Lyk ‘That the Burlington Mall lacks a brokerage ofce is too bad, because otherwise it would be posible to sit here al dyad check tho traffic in and oot of the various stores, then shuffle dawn to the broker to putin bay oxders on the enc thats the most crowded This techaigue is far from foolproot, but T'd put it far ahead a buying stocks because Uncle Hay Hiss them, whist Brings vs 10 ater Principle #16 you tke the store, chances are you Nove the sock, The sry homogeneity of tax nfo ad ason that makes for dul ealtre alo males forcanes for owners ofttall empanies ‘nd estaurnt companies as nll What sos in on own st ftanteed (6 sll in antic, ws it hs wih donuts, sl lek, hamburgers, videos, mng-home polis, sock, pant, dieses fatdenin toon, yogurt, and feral rangement Te stack ‘ho got mon the Westward Ho of Home Depot which began ‘ila, othe Eastward Hoof Tao Ball which began Cao, othe Soathwand Ho of Land En, wich bez in Whom the Northward Ho of Wal ts, wich bezan in Athans © he Goasinard Ho ofthe Gap ofthe Limited both of which started fn the Mides, ended up wth eanagh money tobe able to aval he Word and get ay trom mals ad chin sores There were fever opprtantes to make foram intel stocks Inthe 1830, decide famous for producancouke-oet houses, ut sl Gene nr shopping and eating habits: Wee Joa Sieibsok wrote Travels wile Charles, be sn Chay soul lone place fom another, bat now i900 topped them ef a the Ba lnaton Mal then ranepted thm baad to» Spokane al 19 Omaha ma and an Allnts mal they ha tey bad a dled an inch Te been pasts to roars sage I wos inrodaced to Levite Furniture early in is 1d risen experience [never fora These compunics do alvays suceeed, but at essex) to mom ior tte progress. which © another tect suits they have “io can wat fore ehn of eos to prove Hi none rea then fakes show on the rod and prove iif in soveral iflerent sewn, tefore you met Employes the malls have anise” clipe, soc dey see ‘whats going on very dy, pts they gt the mond fo te co teagues a to whch owes te Unovig and which ape ots The Base me Staser 18 managers of malls hve the greatest adeamtage of ll—aeces to the monthly sales figures tha are wed to compote the rents, Any store operator wh dda buy shares in the Gap or the Lined, knowing Frsthand the success these stores wero having month aftr month ould be swaddld in ker tape and set on a dance sto! inthe Wind of the teal Charles Sehvab ofc. Even Tean Boesky never fot tote ip than these~—and he cheated. “The Lyach family hes no relatives who are mall operators, oth exwiso Ta Be inviting them over for dinner thee of Tour times 2 beck it we do have shoppers, which isthe next best thing. Mi bile, Carolyn, docant do ae mush research a the resister ax she face did (although she dacs hve eevralfienge who have their luck belts in shopping), but ove thee daughters have more tha made vp for her abence. It took ot 2 me to ate to theit ‘xcelem analysis. "A couple of years ago, we were siting around the kitchen table when Amie sod, Is Clearly Canadian pubic company?” whic ir the kind of question ovr family has been ensourated to pose. 1 flceudy knew they liked this ew carbonated drink becuse oot fetrgeator ss ull of Clery Canaan Dortes, But instead of taking the hint and doing my homework, I Tooked it up inthe SRP book, did't sce i listed, and promply forgot about Te turned out that Clearly Canadian was listed on the Canadian ‘exchanges and hadnt yet appeared in the S&P book. That 1 ne ecto purse ft W9e very unfortunate. Aer Clearly Canadian went publ in 199, the sock price increased fon $3 10 26.75, For etry a nine-bagger none fear, belore sting back othe S15 level This the ind of setur you'd be happy to ge in # doce Te soraly oud all of my 1991 recammendutios in Barron’ alo ignored thet positive reports on Chis restaurants. The the gins often wore their green Chils sweatshirts to bed, which reminded me how stupid I as aot to take Thor investment cour Seling more seriously. How many parents base folloed a nelghbor's bd advice and bought shares i @ gold mining enterprise or a com rete eal-estte partnership Instead of flloming the chen the mall where they mould have hen led sigh 0 the Gap and fis 1.00 percent return from 1986 to 1997? Even i they'd waited tin 1991 to follow their chldeen to the Gp, they woul have ‘ube their money in that one year, beating lhe major Known ands. ‘AS much a6 we lke 10 tink our cilten are wsigue, they are 154 Peer Lynch also part of aa international tribe of shoppers with the same taste in caps Tahir, socks, and prewriaked fans, so when my oldest aught, Mary, gis her wrdrabe from the Gap, safe a= ‘sumption that teenagers at all he nations etlts are doing he same. ‘Mary had inated coversge on te Gap inthe samme of 1990 by buying some of her seboo! wardrobe fromthe store onthe second Aor of the Burlington Mal. (Here's another tip from 4 veteran smal wrchor: in double-decker mall, the most popu retalrs are ‘sualy found upstairs. The managers arrange it thst ayo as many fastomers a8 possible pass by a8 many stores as posse on thet $y fo the busiest, an therefore the mos! profitable, awn) When the Gap bad boen a jeans outlet she had find poor opinion af bot lke tnowsands of ater toene she was atasted tthe colorful few merchandise. Once again 1 ignored this powerful buy si just as T had ith Chis and Clearly Canadian, Twas determined not to repeat the mistake in 192, “ust before Christmas, took my three daughters to Burtington for what wan billed as 4 “Chistian present trp for them, but for se wos mace a esearch rp. Kwan them to lead te 1 tit favorite store, whieh bated on past experience as as nalible & buy sigoal as you could hope to find. The Gap vas cromded, a8 usual, but thats not where they beaded fist, They headed fo the Boy Shop, “The Body Shop sells lotions and bath off made from bananas, nuts, heres. Feels beeswax mascara, kis -raiip alm, art moisture eum orchid cleansing rile, honeyand-otmea rb rhask, raspoerey ripple lotion, seaweed-ond-birch shampo, a something even more msterious, called Rhasou! mud shampoo Rhassoul md shampoo not something Pd normally put on my stopping st, but obviously & lot of other people wow, becnise the store was logge with buyers Tnfact, the Baty Shop was one of the Hee most crowded stores in the entre mal, along withthe Gap and the Nature Company, ‘owned by CML, which ao cmos the poplar NordicTrack that no sitin people's ining rooms. 8 my rough aleulation, the Body Shop 8nd the Nature Company topetor oceupied 3000 square feet, But they appeated to be doing 8 mish busines at Sears, which his 100,000 square fer of seling space and looked empts “As [contemplate the bots of banana tah hat my cil sore carrying the cash ope, remembered that soup anayst 42 Fis, Monica Kalmanso, bad recommended the Body Shop sone ur weely mtg back in 190 Tso remembered tha Fan's head itvacan, Cay Stephenson subsequent ther wel yng and dcinancing jo (eran department of 30 ic top a Bay shop tenhise with hx own my Perel one ofthe csi Me. Spero was he owner of this particular Body hop oni trmed ou she na, though she mast Tah store th eyo our vs Ft message that vs eager fo ‘peak to he Tie stre appeared tobe well managed with a soung and en hansen ore ofa lests oven ppt Welt mh several gro shampoos and body sbapr te ingredients of which would tse made a imprest sai ack a the ofc. [ Hooked up the Body Shep on my mater primo fsck tha Mages cuned on the dy omy departure Metta mas wet ng sy hometown lephone dis {coy There tory cho, Isa that ' owe sates in hs ‘Sibpay in 1989 and smc had Fog the fact The By Shop oe of tne many "tune ar” stocks ht purchased tarde to keep tack of ute developtet. wach ati ase Fabby egiected fot Betore Pd seon inthe mal You {ould hive told the Boy Shop was a ote reat fancied {Teould hve tev I Acorn amount of arnea bound fo Setin when you's tying to fll 1.400 companies “Tong he anaes repos rows couple of rorage Sms, I git cust up on theory. Ths was 2 Brita cpa sed by sr init hownwife, Anke Rodlck, wse band ws > ‘ent oto town on bsines Ista of wating the Soap ops raking tebe late, se bpan Sering wih potions in her frag Her potions nee so popula ht she Dyan to sell them in {he eihborod, an ths Dockyard eterpese soon developed to ‘Teron busines tat went pbb in BK for Spence cushy 10 Sens)» sare rom te mest hegning, the Body Shop ws soon wansforned into antennal etworto fanhusse devoted apating rts sls the kn. pt of two ig bes (th tok ost is atc in the Great Coveetion and spin the Sada Sele Sif, nsie years the peace Fe had tured ino 362 pence, more {hat 2 TOid return oo tvextment forthe lacky feeds of the teander who bacghtin onthe inating. The Body Shp eds 156 Peer bye on the London Stock Exchange, But tan aso Be bongs and sold trough most U.S. broer Tis isa soil comeious enterprise lke Celestial Seasonings oe Ben & Jr's i ceam, Tes om atl ingens neg, Some thet ar extracted from the ran foe by Keyan Indie it they did’ have ths Job might be cating down ie tne ene Aivng) shuns advertising. grou employes onc doen ne er week lor community sovie scree, roms hee ent ‘faut (ater al how myo wileverbe Dosa its shopping bugs. and pups a 25 coat remand orca ie en bone tars retuned for el “The Body Shop's cnmmitmen: to something other than money tas not ibe the franchises fom making plenty ote Cy ‘Stephenson told me thats framehite ovner could expcetw Say Prot inthe firs year. She'd done so well withthe Bolegton cre tha she was preparing to open a second sone in Hasan Sp snd this inthe mato a esession ln site ofthe recesion, Body Shops worlwide reported an increas in sarestor ales a 19. (Same sre sale oa he {moor thee ky factor in anlying arta eran.) ty Ss oducts are priced above the shutnpoosand obont slain teers Stores, but belo those sll in pity and depariment ses Tan ives the company “prieenicke ‘The best part ofthe sory wa th the expansion was ints aly stags and the ea sored to have wotlDvie appeal, The coneey it de most Body Shops pet capita nas Canad, wid coe, open for business, Already the Body Shop had cane the ne Gabo of all Canaan tetas, in alee perxpone foo ‘ere'was only 1 Body Shop im Japan, | fy Genny and 70 in the US. Itscemed io me that il Canada, mith one teh te OG Population. could sopport 82 Body Shops, the U.S. coud ape east 92 ge oa ith ets of smth ahead ofthe company was proceeding ‘areflly and expanding with cation. You wantio mond the eaaio, that expand 10 fast, eapecialy it theyve doing Won Bence money. Sine the Body Shop was trnchise opts, ents {0 -espand onthe etnbsces’ money I yas from CaihySteptenson that 1 leamed ofthe company’s ato, delterate appinach. She sad had prea ey ea ‘0 run 2 suscessfal Hoty Shop in Butington, bu belare she ae Beans mie Suet 157 Preertaaencger sure mr rte sei aereerece ee ere Suga SUN Spec ee oe too gut stad TA te te Las stecchig thie compaty, thee eto ofthe entre S&P 30 wow 38, and Cta-Coa ed eof 0-H tee Sowa fos choke teewsen ning Carol, #1 peren oe sna earings ey Sn peng “tng tin earner i, Ay oh ‘high pe thats grming ft te wl evenly outertorm dae vith loner eta’ rowing at ver ate They questo war wheter he Ho Spoil ep 18 Beer Lynch up 25-30 percent gromth rte long enough for the stock to “catch Up’ to i otycument pie. This casi than done, but Twas impressed wiih the company’s peoven ability to move into new rar kets, and its worldwide popularity This wap an international enter- prs almost fom the stat. The company ha installed itself on ix {natinents and had ardly sratced th sure of any of them. I all goes according t0 plan, we could eventually soe thousands of| Body Shops, andthe stock might incase another 7.00 percent Tee the uniqae glbol post of this company hit nape ne to support it publicly in Barron's. I would have touted it a the fnly Sock person shold ove, and was are that the bigh rice Felstie to caring et itl tom fr ero The est way to bande 2 station in which you lore the company but net the current price ‘sto make a small commitment and then increase iti the next sell of “The most fascinating par of any of these fst-gromih retailing stories, whether i's the Body Shop, Wal-Mart, or Toys"R"Us, hos” mach time you have to cach on to them, You ca alford 0 sit for tings to clarity thomscies before you ives. You don't hive to nuthin and uy share wile the mentor ofthe Body Shop lotions i til testing the crginal potions in her gage. You don't have to buy shares when 100 Basly Shops have been opened in England, or even when 300 or 400 have been opened worlwide Eight seersaffr the publcoffring, when ny daughter Jed mets the Burlington store it was stil not too late to eapitaliz onan den thar leary had no et tun its course. "T anbody ese els you thats stock tha’ already gone up 10- fold or 30-404! canna pasably go higher, show that person the Wale Mart chart. Twentyttee years ago, 0 1970, WalMart weat pblic ‘ith 38 sores, most of them in Arknsns, Five years after the nil fffering, i 1975, Wal-Mart had 104 stores and the stock price had ‘quired. Ten yes alter the initial ollerng, i 1980, Wal-Mart Thad 27h stores, andthe stock war up meaty 20 fod, Many lucky resden’ of Bontomille, Arkansas, the hometown of Wal-Mart founder the recently deceased Sam Walton, invested at fhe cafes opportunity and made 20 mes their money in the Fst decade. Wari time 1 sll acd not be greedy and pu the money into computers? Novi he) believed in making 8 profit. A sock doesn't care who ows it and questions of groed ae best resolved Inchurch or inthe psyehiatis¢' ofc, not inthe reizement account. Beane rae Smee 159 ‘he important sve to analyze wos not whether WoLMart sock cul punch he rceditstarholdes, ut whether the company Torta te market The answer simple: evn in the 19705 Wale ui the tock andi he earings, there wore Wal Mare stores fr only 15 porent ofthe country That et &S percent Shuichi compas could stl 1 Ta Ghat hae bought Wal Mart tock in 198, decade ater cane publi, after he 2-0 in vas already achieved, and after Sam" thon had become famous asthe iionare who dione & lap truck. If you bel dhe tock fom 1980 through 199, you AP un inde 30s ain and in 81 yoU Would tae made sro ab pereent on your moncy in WalMart giving sou aS isin P gear The patent original sharcholer hike tha (© fadtgrendy shout, on top of the orginal Dold gin. They bo Fretno on, png har pens tn conor or esate, te growth ht propels camings andthe tok pace comes mainly irom expansion. As lone ‘Sthesamesor a ron the eee ewe rumbersare shown Not an garely repens), he company snot crippled by Bene db folowing is expamaon plas 2 described ‘Oehoters ants epots, Waly past sk ith he tok Such Smt Comomy 11390 Pre NINE, PROSPECTING IN BAD NEWS How the “Collapse” in Real Estate Led Me to Pier 1, Sunbelt Nursery, and General Host Digging whore the surroundings ae tring and plessnale ma prove tobe av untewaring a doing detesie work fom a sued ir You've got to go ino places where other investor and co ely fd mag ated he pon ot 1991 came ts clowe the oon fenton paces wer allonmece to housing and realestate is 2 : Real etite had bec the peli national sae fr more tba tuo yt Te amon peo commer eal ote ts tors too spresding nt resident rel etate—hou prices tere a (0 be plommeting so fo ht the sellers wold 00m be [Bong their ded ama Tsay this despair in ny own neighborhood in Marbchead, were so many forse signs bad sprouted tat you would bavethovght the forsale gn wos the new sae flower of Masschosets The Sins eventually appeared bs the frstated sls got ted of wating for decent fers. People complained tat the indecent ffs they Ud gt were Np low what hey oul ave gation {we or thee year caer There wx plenty of eisai ex

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