Simple Strategy Rakes in the Profits

John Fischer holds the Guinness record for the world’s largest ball of stickers.

It’s not surprising.

He is also the founder and CEO of StickerGiant.com, a Colorado business that Forbes dubbed one of the best small, private companies in America.

More surprising, stickers are a burgeoning industry.

It’s a lesson for investors. Great businesses often get overlooked.

Fischer’s story personifies the American Dream. From the basement of his home, Fischer launched StickerGiant in the post-election drama of the 2000 Bush v. Gore battle. Its top-selling sticker, “Not My President,” struck a nerve.

Always a consistent moneymaker, StickerGiant moved from bumper stickers to Homer Simpson and from Kiss Army throwaways to custom-printed adhesives manufacturing. Today it is a multimillion-dollar business with 40 employees.

The company now processes 18 miles of stickers every week, which is a lot. And Fischer is crystal clear how the company got there.

“Find your hedgehog concept,” he says.

To succeed, Fischer explains, you must find what your business does really well and cut out the rest of the clutter, so you can do it better.

He’s right. And I look for that simple winning strategy even in the public companies that I recommend to my members.

John Fischer launched the wildly successful StickerGiant.com during the 2000 presidential campaign.

You will not mistake them for Tesla, or even Snap. There are no celebrity executives or trendy products.

The companies I recommend can be as boring as watching someone watch paint dry. But they are profit-making machines. They found a niche, and they are exploiting it.

They make best-in-class products, and they demand premium prices. Meanwhile, they invest in innovative technology to drive costs down.

 They are building high-margin businesses in places most investors never bother to look.

Some make shoes and sweat socks. Some make water heaters or run electric utilities. They are not glamorous. They’re just profitable.

More important, their stocks have dramatically outperformed in good and bad markets.

These companies stick to their knitting. There are no crazy acquisitions. No radical business model changes. They never stray too far away from what they know works.

They found their inner hedgehog long ago.

Charlie Munger, the 93-year-old Berkshire Hathaway partner, tells an amusing story about oil and fertilizer.

A while back, executives at an oil company decided it was a great idea to invest in fertilizer. They had no particular expertise in fertilizer. But they knew the ins and outs of natural gas, which can be used to make fertilizer. Surely, they thought, it could not be so different.

Very quickly, others in the industry followed their lead. The oil industry was soon rife with fertilizer.

It all ended badly. Lots of ugly write-downs followed. Apparently, fertilizer was very different from the oil business, after all.

Corporate hubris kills. It hurts shareholders.

When compared to Exxon, Fischer’s sticker business is a gnat. That’s not a bad thing.

As an investor, I would take a well-managed, small or medium-sized business with an established niche over Exxon all day long. There is nothing wrong with focus and humility.

Especially when the profits keep rolling in.

Finding these opportunities is not easy.

From a universe of 4,500 public companies, I have a list of just 70 stocks I’m watching right now. Of these, only a handful are worth buying at current prices.

Like business building, investing requires discipline. It also helps to look in places most people ignore. Then stick to it.

Best wishes,

Jon Markman

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Comments 5

  1. ML August 1, 2017

    This article seems to be missing the punchline……so the stocks I like are…….

    Reply

  2. H. Craig Bradley August 1, 2017

    SMALL CAP FUND MANAGERS AND LACK OF “ALPHA”

    A recent Barron’s article mentions 55% of Small Company fund managers failed to do as well as the Russell 2000 for the past 5 years. This suggests that institutional money is not necessarily the so-called “smart money ” when it comes to finding quality, growth oriented small caps for reasonable valuations. Another words, its pretty hard to find much “Alpha” in regards to many small company actively managed funds.

    In addition, the article suggested a good small company Index ( at Vanguard, for instance) might be a better holding for less in fees, since the big boys don’t earn the fund fees they charge so often. Many (1/2) have poor track records. For whatever reason, small cap managers just don’t do the legwork ( necessary fundamental research). Being mainly a chartest or technical trader is not “investing” anyway, its “speculating” based on market or stock price trends. Buying good small company stocks means often also being a type of Value investor. You have to be patient in large cap growth markets like we have had for the past few years too.

    Reply

  3. Jon Wexler August 2, 2017

    Being a Jon like me, you could even be a match for smarts, except would have to be in Collins, not Wall St. So if you’ve got 70 Aussie stocks gonna go gangbusters, let’s hear some more

    Reply

  4. Ron Howard August 2, 2017

    Jon,

    Good insight not only in regards to the markets but also in many areas of life. It is in the hidden value that great opportunities exist but they are not obvious so therefore the great majority of folks will always be perplexed and never advance very far. Only the students of the markets who are truly interested may benefit. I came to this way of thinking by studying strategy, namely military strategy since that is where the subject originated. The leading figure in military strategy is a British officer by the name of Basil Liddell Hart. He wrote many books centered on only one element of strategy, namely, the indirect approach; which is to say take the road least taken. Your stock picks are on the road least taken. I have made over a million dollars travelling the hidden road elsewise, I would have wound up like most traders….broke.
    Thanks,
    Ron

    Reply

  5. James August 5, 2017

    How’s this all gonna effect the boom, recession, depression, recovery and growth cycle that we are in. I predict strong growth in GDP at factor costs and GDP at market prices. I predict growth in the solow steady state residual. I also predict increasing returns to scale. I also predict economies of scale. Stay out of real estate investment trusts. There’s gonna be a gold tranche. A return to the gold bullion standard maybe even a gold rush. Exchange rates will remain fixed and flexible to stay out of the currency markets. The best markets to go in for are the commodities market oil, gold and precious metals.

    Happy Investing

    Kind Regards

    Jim C

    Reply