A Thousand-bagger — McDonald’s In The Sixties

Posted by admin
on September 24th, 2010

Michael Bigger at Bigger Capital posted a fascinating analyst report from the early days of McDonald’s. It’s very interesting to read the perspective of the analyst investigating a relatively small operation, knowing in hindsight that McDonald’s would quickly become an American icon.

From the original post:

A good friend of mine, a talented research analyst, covered McDonald’s (MCD) in the sixties. One of his field reports is posted below. My friend liked the company and bought the stock at a price of $.06 (post split). He still holds a major portion of his original stake. The investment has returned more than one thousand times.

The lesson of this story is that you will most likely stumble upon one or two great companies like MCD in your lifetime. If that happens and your insight leads you to buy the stock, hold on to it for a long period of time. Don’t get shaken out of your position.

The article highlights the importance of taking a moment to recognize the value of what you have on your hands. There comes a time when you need to take of the blinders and realize that you should be playing for dollars instead of dimes. One example that comes to mind is traders playing the PBR – PBR.A spread in the first half of 2009 when buying PBR outright or at least heavily overweighting the spread to the long side was the (now) obvious deep value play.

Please click the link for the original article: A Thousandfold Return on Investment

McDonalds