One-Year Review
The first year of Flyover Stocks is in the books. Time to take stock of what's been and what to expect next year.
Flyover Stocks turns one year old today. It’s been a busy year!
70 posts (including this one)
47 free posts; 23 paid posts
20 podcast episodes
As of today, Flyover Stocks has 5,200 total subscribers across all 50 states and in 100 countries. I’ve written publicly for 18 years now and seeing how far posts can travel is never not awesome.
I recently sent a brief email survey to all subscribers and I appreciate the responses and the feedback. Some of the suggestions will be implemented immediately.
Thank you for your continued interest in Flyover Stocks.
Here is the most-read post of the year:
The most-read company profile (free preview):
My favorite post to write:
Back to basics
Whether you’ve been here from day one or this is your first article, it’s a good time to review exactly what Flyover Stocks is about.
I view Flyover Stocks as an investing journal. When I sit down to write about moats, management, or strategy, the topic is front of mind, and I’m motivated to explore the subject and refine my understanding.
One of my favorite lines from the late comedian George Carlin is: “We think in language. The quality of our thoughts and ideas can only be as good as the quality of our language.”
To me, that’s what writing is all about - a quest for the language that best describes what we’re thinking. In most cases, the right words fall into place only after writing on the same topic over a few years. Look at your fish.
Company profiles
Flyover Stocks company profiles are deep dives into overlooked or underfollowed companies - hence the newsletter’s name - that I believe have economic moats and are led by thoughtful stewards of shareholder capital.
Importantly, Flyover Stocks is not a buy-sell recommendation newsletter or a real-money portfolio. Everything here is for informational purposes.
To be sure, it’s more exciting to research a quality company that also looks cheap, but I choose the companies based primarily on moat and management attributes.
It’s far better to start research on quality companies before they get cheap - and they always do at some point - than wait until they get cheap and then start research. In my experience, quality companies don’t stay cheap for long, so best be prepared.
My early write-up on Howdens Joinery is free and provides a good example of the type of research you can expect to get at Flyover Stocks.
Early surprises
Because the company profiles aren’t “picks” I don’t publish their subsequent performance, but I do keep an eye on each company, especially if there are material changes in the business or in the outlook.
The worst-performing company profiled thus far is Grocery Outlet, which as of August 15, was down 31% from the closing price of the day it was profiled. To make matters worse, the S&P 500 SPY ETF was up 32% over the same period. Ouch.
Grocery Outlet grew its store count 17% since last October by acquiring United Grocery Outlet in April and through organic growth. There’s a new location in Cincinnati that I plan to visit soon.
All that growth may have come at a cost, however, as Grocery Outlet ran into margin pressure from a poorly rolled-out technology system and the CFO departed in December. Not a good mix.
It’s still early days for Grocery Outlet, of course, and as the company grows its bargaining power with consumer goods suppliers should improve.
On the positive side, the best performer thus far is Hawkins, which is up 77% since the February profile and has outperformed the SPY by 67%.
Its water treatment business, which was the focus of the profile, has continued to knock it out of the park and beyond my expectations.
What’s intriguing about Hawkins’ water business model is that the drivers are also trained technicians and salespeople who own their book of business. They’re incentivized on gross profit, which incentivizes them to not concede too much on price to win or retain business. Further, that means they must earn their sometimes-premium price with exceptional service. It seems to be working.
Thanks again
Having written publicly about investing since 2006, it’s hard to imagine writing not being part of my routine. It’s provided myriad benefits over the years, the best of which is connecting with other thoughtful investors.
Flyover Stocks has been no exception. I enjoyed meeting some subscribers at the Markel event in May and hope to have more such occasions in the coming year.
I look forward to writing more posts and company profiles in the coming year.
A special thank you to the premium Flyover Stocks subscribers who financially support this newsletter.
Stay patient, stay focused.
Todd
At the time of publication, Todd, his immediate family, and/or KNA Capital Management owned shares of Howdens Joinery. Please see important disclaimers.
Wow. 70 posts. Respect
Congrats on the first year Todd! Keep up the great work.