Historical returns on National Beverage (FIZZ)

[DTEJD1997]

Hey all:

 

Years ago, sometime around 1991, I bought 400 shares of National Beverage at 4 3/8.

 

It went up in price, and I think I came close to doubling my money and I SOLD!  I remember being very happy at the time with such a nice trade.

 

I promptly lost track of the company until about 2006 when I recommended my Dad purchase some.  He did and has done well.

 

I then looked at it's history and saw that me selling it was one of the worst mistake of my life, as it appears that FIZZ has been one of the best performing stocks there is.

 

A couple of years after I sold it, it split, and has split many time since....

 

Here is the history:

 

11/10/94  4-1 SPLIT        1,600 shares

10/28/96  2-1 SPLIT        3,200 shares

3/23/03    2-1 SPLIT        6,400 shares

3/24/03    Dividend          5,312 dollars

1/3/06      Dividend          5,312 dollars

5/31/07    12:10 split      7,680 shares

7/18/07    Dividend  .8            6,144 dollars

1/14/10    Dividend  1.35        10,368 dollars

1/24/10    Dividend  2.30        17,664 dollars

12/5/12    Dividend  2.55        19,584 dollars

 

So if I had held those shares, that I paid $1,750 for, I would have received $64,384 dollars in dividends and would have 7,680 shares worth about 107,136.  So total return would be about 171,520, which equates to a 100X bagger over 21 years. 

 

I would posit that FIZZ has been one of the best performing stocks over the last 20 years.

 

Obviously, this was a huge mistake I made.

 

Any thoughts?

[LC]

My first question: how do the economics of FIZZ look in terms of the next 21 years?

 

[Yours Truly]

What fundamental reason triggered  you to sell? Could you have foreseen such exponential growth in the company?

[DTEJD1997]

Hey all:

 

Yes, I think FIZZ's outlook is good.  Not as good as it has been for the past 21 years, but certainly better than the average company.

 

What prompted me to sell?  I was a 20 year old investor, I just about doubled my money in a year, so I sold.  I was inexperienced.

 

I now have a bit more experience.

 

If you will observe, FIZZ has a return on assets of about 24% and a return on equity of 55%.  Clearly, this is a high quality company, and has been for many years.

 

I just hope I can into another few opportunities like this. 

 

We'll see.

[Yours Truly]

Hey all:

 

Yes, I think FIZZ's outlook is good.  Not as good as it has been for the past 21 years, but certainly better than the average company.

 

What prompted me to sell?  I was a 20 year old investor, I just about doubled my money in a year, so I sold.  I was inexperienced.

 

I now have a bit more experience.

 

If you will observe, FIZZ has a return on assets of about 24% and a return on equity of 55%.  Clearly, this is a high quality company, and has been for many years.

 

I just hope I can into another few opportunities like this. 

 

We'll see.

 

I've looked at the data on this from its early years (1990's) and it's exactly what i'm looking for currently in GARP-y stocks...

 

- High insider ownership (founder owns 71% shares o/s)

- ROE consistently over 15% with little to no negative years

- Share count remains stable (basically flat lined between 44-45 mil shares)

- Small capitalization (lots of room for growth into a mid/large cap)

 

The only outlier is that they have moderate-considerate debt levels which is most likely due to the industry its in.  Most owner-operator/founder companies usually have very low levels of debt as growth is funded by free cash flow in most cases.

[HJ]

They just borrowed to make a very large dividend payment towards the end of last year.

[hyten1]

folks i have not done a lot of research yet still looking

 

but i did notice one article that mention their inventory (finished goods) has been growing faster than sales, any comments on this?

 

hy

[Martian]

They just borrowed to make a very large dividend payment towards the end of last year.

 

I know that they paid dividends by borrowing money. But I'm not sure who lent it. This is from the yahoo board.

 

start-quote

 

Don't get me started on that - OMG!!!

 

1. Declare $2.55 special dividend. $1.75 of it to be funded by money you don't have. Bulk of the dividend will go to CEO.

 

2. Take on $60 million of new debt for part of it

 

3. Now, for the financial engineering - the remaining $20 million. CEO figures that with interest rates so low, he could only get maybe 1% rate on long term CDs for his own money. However, with $20 million of his special dividend he's going to "lend" the money back to the company in exchange for these new D shares (cumulative preferred) - so, for the company, it's "equity" (that is, debt disguised as equity). Note, these preferreds are senior to the common stock - meaning no dividends will be paid to common shareholders going forward before the D shares get their dividends.

 

4. So, what was the necessity for paying out $2.55/share if the company didn't have $1.75 of it? The necessity for CEO to withdraw money from the company, and then set up a personal dividend for himself going forward. A "dividend" which tracks LIBOR. To me it looks very much like an inflation adjusted variable rate interest only loan.

 

Was there a necessity for taking on the $60 million debt when the company was debt free? Of course not - because there was no need to pay the oversized special dividend in the first place. That is, unless you own most all of the shares and decide that you want to take money out of your piggy bank. Now, what is the debt/equity ratio? 102% - really great move.

 

Then, the D shares - no need for that either. Dividend could have been reduced by $20 million. But, with the extra $20 million paid out, now CEO (and whoever else is hiding under veil of the LLC) can collect their personal dividend going forward indefinitely.

 

end-quote

[DTEJD1997]

Hey all:

 

Forgot to mention that had I held the FIZZ investment, it would have had a COMPOUND rate of return of between 24% & 25% PER YEAR!

 

Can anyone think of a stock that has had a HIGHER 20 year rate of return than that?

 

Thanks in advance!

 

 

[Palantir]

In case you remember from all those year ago.

 

What did you find interesting in FIZZ that drove the original investment? Just looking to create a mental model here, looking at REED, personally.

[Yours Truly]

Hey all:

 

Forgot to mention that had I held the FIZZ investment, it would have had a COMPOUND rate of return of between 24% & 25% PER YEAR!

 

Can anyone think of a stock that has had a HIGHER 20 year rate of return than that?

 

Thanks in advance!

 

Nasdaq: FAST, ATRO, CELG, BIIB, DIOD, ORCL, QCOM, EMC, IIVI, MIDD, KSU, etc etc