A good article from Jim Shepherd, but moreover something to think about when you're spending you dollars on products...
Homogenization is great - if you're a dairy farmer trying to make certain your milk and cream are emulsified and won't separate.
There might be a pretty good case made that homogenization, "the process of making things uniform or similar" might not be the best idea when it comes to blending together different businesses.
In fact, it's an accepted fact that "cultural homogenization" is a barrier to multinational business. Texture is required to "flavor" a business. Perrier without French flavor is: water.
A distinctive "essence" sells your brand. McDonalds, Pizza Hut, Coca-Cola, Pepsi, and other great brands prove it every day. They must deliver as expected results - wherever their signs appear - globally.
Having eaten Pizza Hut pizzas from Miami to Moscow (Russia), I can assure you there's comfort knowing your three-topping, deep dish pizza picked up just off Red Square in Moscow when it's -35 below zero might not taste exactly like your local carry-out, but won't contain any form of beet (and for the record I like borscht, just not every meal).
Risking the loss of the uniqueness can make consolidation a risky proposition.
When corporations acquire a brand, they're looking to add those all-important "efficiencies" - it's how they get the requisite return on their investment for shareholders.
But it's a tough thing to keep "efficient" and "unique" in balance.
If you achieve "efficiency" but sacrifice "unique" - have you really acquired an asset, or added another head/logo to your corporate trophy wall?
And will that soul-stripping damage your own standing with the acquisition's brand-loyal consumers? The answer - according to the overly-stimulated social media climate of today- is a resounding "yes." You will hear about it.
Seems the drive to do "more" causes executives to forget that the attraction of an affinity business isn't its being favorably disposed toward "efficiencies" - it's their "essence."
Glad I'm not a corporate executive today-especially one playing the grown version of Pac-Man.
This week, Bass Pro Shops cleared another hurdle in their acquisition of Cabela's. And Vista Outdoor announced their CEO was retiring- immediately. Gander Mountain's still being restructured by its new owner -likely foreshadowing a retail mashup of RVs and outdoor sports.
And on it goes. Consolidation is in full swing in the outdoors.
But, as one of my favorite movie lines asks, "is the juice worth the squeeze?"
What does it gain a company to acquire a small business if the acquisition devolves into just another check box on the "well-rounded conglomerate" checklists?
Thankfully, I can leave that as a rhetorical and let smarter businessmen answer that one.
Changing gears now….if you've ever wanted to invest in the outdoor industry, here's a good way to get started - for not a lot of money. It's your chance to dip your toe into Wall Street without risking your retirement.
If we were playing "Jeopardy" the category would likely be called "Fun for $100".
That's right, one hundred dollars could buy you a very good chance of having a microscopic piece of ownership in something product in virtually every home in America.
Want to stick strictly to the outdoors? Then you're only going to be out around $50.
But let's play big and invest $100. And please remember, you're not spending $100, you're investing it.
We'll begin with one share of Vista Outdoor (NYSE: VSTO). When I wrote this, it was trading at $22.44/share. Buy that single share and, boom, you're instantly an investor in 44 companies.
Now, add a share of American Outdoor Brands Corporation (NASDAQ GS: AOBC) for $21.29.
You've just added another two dozen or so companies to your portfolio-including the iconic Smith & Wesson. That's 60-plus companies for less than a buck each.
And you're cutting quite a presence in the hunting and shooting aisles of your favorite retailer.
Now, let's get wild with our $56.27 and buy a single share of Newell Brands Inc. (NYSE:NWL) for $53.26. You have just over $3 left, and have moved your "portfolio" into virtually every home in America.
I included Newell because they'll still keep you in the outdoor space, but diversify you almost beyond comprehension.
Newell owns Coleman, Marmot, Contigo, Bubba in their "Outdoor & Recreation" brand portfolio. Their Fishing brands include Shakespeare, Berkley, Abu Garcia, Penn, and Ugly Stik.
But their "other" portfolios bring you into the major player category: Sunbeam, Mr. Coffee, Rubbermaid, Sharpie, PaperMate, Elmer's, Graco, Aprica, Yankee Candle, WoodWick, Ball, Jostens, First Alert, Bicycle (playing cards), Rawlings; even Parker and Waterman pens.
In all you can get some 58 Newell brands- again less than a buck a brand.
So there you have it, a $100 portfolio consisting of three shares of stock -representing considerably more than 100 companies - with the likelihood that virtually every home in the United States will contain something in which you held an ownership interest.
And you've not spent your $100- you've invested it.
If the companies do a good job of balancing all the intangibles that go into running a conglomerate, you'll get an annual return on your investment. And (here's the payoff) - if they don't- you as a shareholder- have a right to let them know you're disappointed.
And they have an obligation to listen.
And you thought "investing" would be dull and cost you a fortune.
--Jim Shepherd
Editor's Note: As a formerly licensed stockbroker, it's appropriate that we remind you that Jim Shepherd's remarks are theoretical, not investment advice. Investing involves risk, and all investments are capable of both gaining or losing value. Always consult a qualified investment advisor before putting your funds at risk.
Homogenization is great - if you're a dairy farmer trying to make certain your milk and cream are emulsified and won't separate.
There might be a pretty good case made that homogenization, "the process of making things uniform or similar" might not be the best idea when it comes to blending together different businesses.
In fact, it's an accepted fact that "cultural homogenization" is a barrier to multinational business. Texture is required to "flavor" a business. Perrier without French flavor is: water.
A distinctive "essence" sells your brand. McDonalds, Pizza Hut, Coca-Cola, Pepsi, and other great brands prove it every day. They must deliver as expected results - wherever their signs appear - globally.
Having eaten Pizza Hut pizzas from Miami to Moscow (Russia), I can assure you there's comfort knowing your three-topping, deep dish pizza picked up just off Red Square in Moscow when it's -35 below zero might not taste exactly like your local carry-out, but won't contain any form of beet (and for the record I like borscht, just not every meal).
Risking the loss of the uniqueness can make consolidation a risky proposition.
When corporations acquire a brand, they're looking to add those all-important "efficiencies" - it's how they get the requisite return on their investment for shareholders.
But it's a tough thing to keep "efficient" and "unique" in balance.
If you achieve "efficiency" but sacrifice "unique" - have you really acquired an asset, or added another head/logo to your corporate trophy wall?
And will that soul-stripping damage your own standing with the acquisition's brand-loyal consumers? The answer - according to the overly-stimulated social media climate of today- is a resounding "yes." You will hear about it.
Seems the drive to do "more" causes executives to forget that the attraction of an affinity business isn't its being favorably disposed toward "efficiencies" - it's their "essence."
Glad I'm not a corporate executive today-especially one playing the grown version of Pac-Man.
This week, Bass Pro Shops cleared another hurdle in their acquisition of Cabela's. And Vista Outdoor announced their CEO was retiring- immediately. Gander Mountain's still being restructured by its new owner -likely foreshadowing a retail mashup of RVs and outdoor sports.
And on it goes. Consolidation is in full swing in the outdoors.
But, as one of my favorite movie lines asks, "is the juice worth the squeeze?"
What does it gain a company to acquire a small business if the acquisition devolves into just another check box on the "well-rounded conglomerate" checklists?
Thankfully, I can leave that as a rhetorical and let smarter businessmen answer that one.
Changing gears now….if you've ever wanted to invest in the outdoor industry, here's a good way to get started - for not a lot of money. It's your chance to dip your toe into Wall Street without risking your retirement.
If we were playing "Jeopardy" the category would likely be called "Fun for $100".
That's right, one hundred dollars could buy you a very good chance of having a microscopic piece of ownership in something product in virtually every home in America.
Want to stick strictly to the outdoors? Then you're only going to be out around $50.
But let's play big and invest $100. And please remember, you're not spending $100, you're investing it.
We'll begin with one share of Vista Outdoor (NYSE: VSTO). When I wrote this, it was trading at $22.44/share. Buy that single share and, boom, you're instantly an investor in 44 companies.
Now, add a share of American Outdoor Brands Corporation (NASDAQ GS: AOBC) for $21.29.
You've just added another two dozen or so companies to your portfolio-including the iconic Smith & Wesson. That's 60-plus companies for less than a buck each.
And you're cutting quite a presence in the hunting and shooting aisles of your favorite retailer.
Now, let's get wild with our $56.27 and buy a single share of Newell Brands Inc. (NYSE:NWL) for $53.26. You have just over $3 left, and have moved your "portfolio" into virtually every home in America.
I included Newell because they'll still keep you in the outdoor space, but diversify you almost beyond comprehension.
Newell owns Coleman, Marmot, Contigo, Bubba in their "Outdoor & Recreation" brand portfolio. Their Fishing brands include Shakespeare, Berkley, Abu Garcia, Penn, and Ugly Stik.
But their "other" portfolios bring you into the major player category: Sunbeam, Mr. Coffee, Rubbermaid, Sharpie, PaperMate, Elmer's, Graco, Aprica, Yankee Candle, WoodWick, Ball, Jostens, First Alert, Bicycle (playing cards), Rawlings; even Parker and Waterman pens.
In all you can get some 58 Newell brands- again less than a buck a brand.
So there you have it, a $100 portfolio consisting of three shares of stock -representing considerably more than 100 companies - with the likelihood that virtually every home in the United States will contain something in which you held an ownership interest.
And you've not spent your $100- you've invested it.
If the companies do a good job of balancing all the intangibles that go into running a conglomerate, you'll get an annual return on your investment. And (here's the payoff) - if they don't- you as a shareholder- have a right to let them know you're disappointed.
And they have an obligation to listen.
And you thought "investing" would be dull and cost you a fortune.
--Jim Shepherd
Editor's Note: As a formerly licensed stockbroker, it's appropriate that we remind you that Jim Shepherd's remarks are theoretical, not investment advice. Investing involves risk, and all investments are capable of both gaining or losing value. Always consult a qualified investment advisor before putting your funds at risk.
