Page 542 - How to Make Money in Stocks Trilogy

410 INVESTING LIKE A PROFESSIONAL

1977 at $48. Fund managers didn’t like the idea, so we bought the stock our-
selves. Dome became one of our biggest winners at that time. This and the
following case studies are real-life examples of how it’s actually done.

The Pic ‘N’ Save Story

In July 1977, we suggested a stock no institution would touch: Pic ‘N’ Save.
Most money managers felt the company was entirely too small because it
traded only 500 shares a day, so we began purchasing it several months later.
We had successful historical computer models of Kmart in 1962, when it
traded only 1,000 shares a day, and Jack Eckerd Drug in April 1967, when it
traded 500 shares a day, so we knew, based on its excellent fundamentals,
Pic ‘N’ Save could become a real winner.
Precedent was with us. Both Kmart and Eckerd had become big winners
after they were discovered. Average daily volume increased steadily. The
same thing occurred with Pic ‘N’ Save. This little, unknown company, head-
quartered in Carson, California, turned in a steady and remarkable perfor-
mance for seven or eight years. In fact, Pic ‘N’ Save’s pretax margins, return
on equity, annual earnings growth rate, and debt-to-equity ratio were at that
time superior to those of other, more widely accepted institutional growth
favorites—such as Wal-Mart Stores—that we had also suggested.
I’ve always thought of finding an outstanding stock and buying it every
point on the way up. That’s almost what happened with Pic ‘N’ Save. We
bought it almost every point or two for several years. I liked the company
because it gave a way for families of meager means to buy the necessities of
life at exceptionally low prices. All told, we bought Pic ‘N’ Save on 285 dif-
ferent days and held it for 7½ years. When we finally sold it, while it was still
advancing, our sale did not affect the market. Early purchases showed more
than a 10-fold gain.

Radio Shack’s Charles Tandy
We first uncovered Tandy Corp. in 1967, but we were able to convince only
two institutions to buy the stock. Among the reasons given for not buying it
were that it didn’t pay a dividend and Charles Tandy was just a promoter.
(Qualcomm was another stock considered to be too promotional from 1996
to 1998. We picked it up straight off the weekly chart in late 1998. It became
the leading winner of 1999, advancing 20-fold.)
When I met Tandy in his office in downtown Fort Worth, Texas, my reac-
tion was very positive. He was a brilliant financial man who also happened
to be an outstanding salesman. He had innovative incentives, departmental