About Me

My photo
This is written with serious investors in mind. I'm a former reporter, private investigator and institutional equity analyst who digs deep to find niche undervalued and undiscovered securities. I manage money for individuals, institutions and family offices via my business Long Cast Advisers. This blog is part decision-diary, part investment observations and part general musings about Philadelphia sports. It should not be viewed as a solicitation for business or a recommendation to buy or sell securities.

Monday, February 1, 2016

Friday's WSJ article on the top 30-stocks over the last 30-years highlights why I focus on small cap companies (EVI)

On Friday, Jason Zweig of the WSJ, wrote a short post on the thirty best stocks over the last 30-years. The list had familiar and unfamiliar names, etc. but I was curious about the market values of the companies from 30-years ago vs today ...

Market Capitalization
TodayCalc 30-yrs ago
~ total market cap of S&P 500$17,500,000,000,000$2,000,000,000,000
as % of S&P 500 market cap9.09%0.28%
~S&P 500 price$2,038$212
max mkt cap as % of S&P mkt cap3.07%0.09%

... now this is a really bad back-of-the-envelope analysis. I simply backed out the 30-yr market caps using the current market cap and the total return figures. So any dividends paid would therefore be reflected as a reduction in market value, skewing all of these companies smaller (I know, I know ... but I wonder how far off I am?).

I also estimated the total market value of the S&P from 1985 based on the market value of the top-10 companies - $300B - and assumed it represented 15% of the total. If I had to guess, it was probably smaller.

Maybe I'll trek down to SIBL and use their Bloomberg terminal or perhaps someone with Factset or Bloomberg can post actual market values from 12/31/1985? All the data I used is pasted below.

What this imperfect data shows (and what the actual data might show) is that the companies with the highest total returns over the last 30-years were all pretty small companies 30-years ago.

Obviously, not all small companies grow 107,000% over 30-years as the first name on the list shows (I talked with a PM who has owned BCPC over the last 30-years and he said, "Obviously I did not know what it would return") but I am confident that the population of companies that will grow exponentially in the future will most likely come from the small cap universe today.

As a patient investor, I expect the companies I buy today I will hold for many many years. And in fact, one name I've written about on this blog is Envirostar (EVI), and it has a connection to Watsco, which is # 29 on this list.

The relatively new CEO of EVI - Henry Nahmad - is the nephew / son of the executives at Watsco who started rolling up companies in the fragmented HVAC distribution business in the 1970's. Henry is in the early stages of planning a similar endeavor in the fragmented commercial laundry equipment distribution space. One can only hope the apple does not fall far from the tree.

Here are some links I used for the data.

Here's the list from the WSJ in gsheets if anyone wants to look at it ...

30-yrmarketcapcalc marketcapactual marketcap
name% returnCAGRtickertoday30-yrs ago30-yrs ago ???
Balchem Corporation107,09926.18BCPC$1,780,657,337$1,661,076
Home Depot Inc67,79524.27HD$160,083,194,883$235,780,536
Amgen, Inc.62,85023.96AMGN$114,882,627,517$182,498,217
Nike Inc42,11122.32NKE$105,393,852,389$249,683,382
UnitedHealth Group Inc40,50322.16UNH$109,512,046,230$269,714,174
Danaher Corporation39,52622.06DHR$59,282,842,285$149,605,921
Kansas City Southern37,38421.83KSU$7,784,655,487$20,767,942
Jack Henry & Associates, Inc.36,71621.76JKHY$6,479,110,661$17,598,627
Apple Inc.31,42821.13AAPL$537,945,105,324$1,706,245,576
Altria Group Inc28,43220.72MO$119,269,087,150$418,018,671
Paychex, Inc.26,83820.49PAYX$17,269,504,168$64,108,338
HollyFrontier Corp26,24920.4HFC$6,383,434,190$24,226,476
Monster Beverage Corporation25,32320.26MNST$27,373,551,700$107,672,390
Stryker Corporation21,32919.57SYK$37,531,444,690$175,143,239
Expeditors International of Washington20,12719.34EXPD$8,425,048,167$41,652,485
Gentex Corporation19,09519.13GNTX$4,010,047,368$20,891,104
CVB Financial Corp.16,23218.49CVBF$1,631,987,874$9,992,578
Helen of Troy Limited16,05718.45HELE$2,530,920,774$15,664,546
St. Jude Medical, Inc.15,95118.42STJ$14,896,194,389$92,805,398
Medtronic PLC15,82018.39MDT$107,345,960,346$674,283,671
Raymond James Financial, Inc.14,58818.07RJF$6,336,206,163$43,138,659
Applied Materials, Inc.14,08217.93AMAT$20,096,658,964$141,705,394
Cracker Barrel Old Country Store, Inc.13,91217.88CBRL$3,144,699,741$22,442,904
Graco Inc.13,59317.79GGG$3,992,493,420$29,157,186
SEI Investments Company13,25617.69SEIC$6,458,793,934$48,358,745
Precision Castparts Corp.13,15217.66PCP$32,326,359,944$243,935,707
Lowe's Companies, Inc.13,03017.62LOW$65,830,888,057$501,377,670
Watsco Inc12,17617.36WSO$4,057,186,436$33,049,743
Dynamic Materials Corporation11,94317.28BOOM$86,167,976$715,503

- END -


No comments:

Post a Comment