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Ten years ago, SanDisk was a teeny-tiny $217 million company. Today, it's a more than $8 billion company that counts giants such as Sony (NYSE:SNE), Canon (NYSE:CAJ), and Motorola (NYSE:MOT) among its partners. Drew Industries grew from its $53 million valuation to $850 million, rewarding shareholders along the way.
And Middleby, for one, is still growing. The company dominates its niche and has almost every trait investors should look for in a small cap: superior leadership, clear competitive advantages, and impressive and improving returns on equity and assets. Since we recommended it in our Motley Fool Hidden Gems small-cap investing service, it has also returned more than 480% for our members -- but we're confident it will keep on performing over the long term.
There were only 23 mid- or large-cap companies that would have given you the same growth, and they're the cream of the crop: Apple Computer (NASDAQ:AAPL) and Lowe's (NYSE:LOW), to name two. And while the returns have been incredible from these companies -- both of which demonstrate some key traits of great small caps: strong brand, strong competitive position, strong leadership -- they're just not as prevalent as the small guys.
That's because it's difficult for larger companies to generate the same kind of growth as small caps. While Middleby grew from $53 million to $850 million, Lowe's grew from a $6.2 billion valuation to be worth nearly $50 billion. While Lowe's added substantially more value in absolute terms, the story changes when it comes to stocks and percentages. Middleby stock increased 1,542%; Lowe's increased 600%. Now compare that with a much larger company such as AIG (NYSE:AIG). The company added $135 billion of value during the same 10-year span. Yet that increase resulted in just 179% gains for investors. That's a consequence of the Law of Diminishing Returns, and it's a simple and crucial point in investing.
Small caps are one area of the market where the individual investor has the opportunity to earn phenomenal returns, but there are also pitfalls. For every one of the 325 small caps that could have earned you greater than 20% annualized returns over the past 10 years, there were quite a few more that didn't make it. Small-cap stocks tend to carry considerably more risk than large caps, so investors must consider their investments very carefully.
That's why we advocate a diversified portfolio of select small caps for Hidden Gems subscribers. By focusing on factors like superior management and a strong balance sheet and enjoying the benefits of diversification, our small-cap recommendations have outperformed the market by more than 27 percentage points since we started.
Every investor should have at least some smart exposure to small caps, because the historical profits are just too good to pass up. If you'd like some help getting started in this incredible area of the market, click here to join our community free for 30 days.
This article was originally published on Feb. 6, 2006, as "325 Incredible Returns." It has been updated.
Tim Hanson does not own shares of any company mentioned. Microsoft is an Inside Value pick. No Fool is too cool for disclosure.
This bodycon dress from Bar Iii is all about the unexpected touches, like chic cutouts that show off some skin and a sporty varsity stripe that runs along the spine.
A teardrop cutout offers an alluring glimpse of shoulder on a Bar Iii sweater styled with this season's statement sleeves.
An unexpected cutout and strap detail at the back deliver modern appeal for this V-neck kimono top from Bar Iii.
A ruched seam takes this tulip-hem T-shirt dress from Bar Iii to the next level of street style fashion.
Show off the metallic-stripe waistband of Bar Iii's legging pants with a tucked-in shirt or crop top.
A bow-tied back adds an extra-cute twist to this Bar Iii stretch jumpsuit in bold and slimming stripes.
Look perfectly chic yet totally on-trend in this work-to-weekend sheath dress from Bar Iii.
Bar Iii's red-hot bodycon dress sweeps alluringly from ruffled sleeve to strap.
One of America's most expensive listings on record has finally sold . Playa Vista Isle, previously known as Le Palais Royal, was a two-parcel listing asking as high as $159 million. After no buyers came forward, it eventually went to auction via Concierge Auctions, in conjunction with Ralph Arias of ONE Sotheby’s International Realty, on November 12th, 2018.
The combined final selling price for both parcels was $42.5 million, as indicated by property records that were updated on December 28th, the second-to-last business day of 2018. The main parcel, with the 11-bedroom, 22-bathroom home with over 30,000 square feet of living area, sold for just over $37 million ($37,081,250) and the adjacent 2-acre empty lot of land sold for almost $5.5 million ($5,418,750).
The new owner is an LLC affiliated with former Teavana creators and owners, Andrew and Nancy Mack. They sold Teavana to Starbucks for a reported $620 million in 2012. The seller, Robert Pereira, founder of the Massachusetts-based construction company Middlesex Corp., likely lost money on the deal, telling the Wall Street Journal in 2015 that the construction costs exceeded $100 million.
Reps for the auction house previously stated that the auction had 11 bidders, with over 29 people touring the house and over 1,800 inquires. Even though the sale didn't meet the nine-figure asking price (which would have made it one of the most expensive sales ever for the U.S.), the sale did set two different records. It is the most expensive home ever sold at auction in the U.S. (the previous record was the $38.9 million sale of Walnut Place in Texas) and it was the most expensive sale in Florida's Broward County (previous record was $27.5 million for 5 Harborage in Fort Lauderdale).
If you missed it the first time around, here's a tour of the impressive build. The marble staircase was said to have cost $2 million.
The 4,500-square-foot infinity-edge heated pool is designed to visually blend in with the ocean views.
22-karat gold leaf figures prominently throughout the home, including this living room with ornate ceiling.
The mahogany-hued kitchen with gold trim is adjacent to the living room with fish tank surrounding the television screen.
The bedroom comes with a private terrace.
As one of just a few homes on Hillsboro Mile, this property has the ocean on one side and the Intracoastal Waterway on the other. The seller spent about seven years conceiving and designing the home but decided to sell because he wanted to travel more, according to several news reports. For Broward County, the next most expensive listing after Playa Vista Isle is a new construction offering asking $32 million within the Las Olas Isles, so it also has views of the Atlantic and Intracoastal Waterway. According to the public listings, there are only nine other homes on the market in Broward County asking over $20 million so this is rarefied territory for the price range.
After a panicky market sell-off of LinkedIn stock, are you worried LinkedIn stock will continue lower? Read this first.
With LinkedIn (NYSE: LNKD) stock trading about 20% lower this month, after the stock tumbled when it reported first-quarter results on April 30, some worried investors may be considering selling the stock. But a closer look at LinkedIn's underlying business shows exiting this winner could be a mistake. LinkedIn still has the characteristics of the sort of company long-term investors would want to see in the companies in their portfolio.
Why did LinkedIn stock tumble?
Was LinkedIn stock's 20% sell-off merited in the first place? To explore whether or not it was, here's the backstory on the reason for the sell-off.
LinkedIn's first quarter results were actually solid. The company's revenue and non-GAAP EPS exceeded its guidance for $618 million-$622 million and $0.53, respectively. Actual results were revenue of $638 million and non-GAAP EPS of $0.57. Indeed, LinkedIn even exceeded analyst estimates for revenue and EPS of $637 million and $0.56, respectively.
So, what spooked the market? The key culprit was LinkedIn management's decision to lower its outlook for the rest of the year. When LinkedIn first shared its outlook for 2015, the company expected revenue of $2.93 billion-$2.95 billion and non-GAAP EPS of $2.95. The new guidance figures for 2015 provided by management when it reported first-quarter results were revenue of $2.9 billion and EPS of $1.90. The big surprise, here, of course, was the huge drop in expected non-GAAP EPS.
Management pointed to its recent announcement that it has agreed to acquire lynda.com, a leading online learning company, as the main reason for the reduced outlook for EPS. Costs associated with the transaction itself, as well as costs related to the integration of lynda.com's business to LinkedIn, will affect the company's profitability in the near-term. Longer-term, of course, LinkedIn expects lynda.com to be a boon for the company's financials.
So, was a 20% sell-off merited? Not really. The long-term story for LinkedIn remains the same.
Beyond the market's overreaction to LinkedIn's reduced guidance, there are concrete reasons the professional social network looks poised to be a excellent performer in the long-term.
1. A solid business model. Unlike its social network peers, LinkedIn's revenue model relies very little on advertising. Its marketing solutions segment, which includes revenue from display ads, sponsored InMails, Sponsored Updates, LinkedIn Ads, and Ads API, accounted for just 19% of the company's revenue. The majority of LinkedIn's revenue comes from its talent solutions segment, at 62% of total revenue. Even the company's premium subscriptions segment revenue competes with its marketing solutions revenue, also at 19% of total revenue. LinkedIn's revenue, therefore, is more diversified from social peers who rely heavily on advertising.
Further, all three of LinkedIn's business segments are growing at healthy rates. Talent solutions, marketing solutions, and premium subscriptions reported year-over-year revenue growth of 36%, 38%, and 28% in Q1.
2. Engagement is still rising rapidly. The professional network is still making formidable gains in member engagement. To put its increasing engagement in perspective, consider that LinkedIn's member page views are growing considerably faster than unique visitors.
2: Based on monthly average during the quarter. 3: Based on total during the quarter. Chart source: LinkedIn.
Between Q4 and Q1, member page views jumped 13.3% sequentially. During the same period, unique visiting members increased just 4.3%. Even more, the sequential rate of growth in member page views between Q4 and Q1 was actually increased compared to the 7.1% growth between Q3 and Q4.
Despite the market's panicky sell-off, LinkedIn still looks like an excellent business to hold for the long haul.
Eighth-grader Ari’yonnia Stanberry has difficulty sleeping after a crash that killed 5, including a close friend.
ST. LUCIE COUNTY — Eighth-grader Ari’yonnia Stanberry looked down and spoke quietly.
Her mother, Christina Harris, sat across from the 14-year-old as tears fell from the teen’s eyes.
Ari’yonnia said they’d been at Walmart shopping on Black Friday and were dropping off a person at the time.
A GMC Yukon had slammed into the back of the pickup in which Ari’yonnia rode, according to the Florida Highway Patrol. The pickup caught fire after the fuel tank ruptured.
A bystander ran over and got Ari’yonnia out of the pickup. The teen sustained burns to her back and ears. The other five in the pickup died.
Harris, 33, expressed doubts about making it through the experience.
Arrested Tuesday in the crash at Midway Road and South 25th Street was 21-year-old Tanner Dashner, jailed on five counts each of vehicular homicide and DUI manslaughter.
Investigators said Dashner’s blood-alcohol content was more than three times the legal limit of 0.08 percent, and that he was driving about 97 mph before slamming into the back of the pickup.
Harris said she learned about what happened when her daughter called. She had just gotten off work at Metro Diner in Stuart.
“She was like, ‘I need you now, we just got in a car accident, the car just got on fire, and I just seen my friend die,’” Harris said.
Harris and other family members rushed to Fort Pierce and saw her daughter at Lawnwood Regional Medical Center & Heart Institute.
Harris said she thanks the man who pulled her daughter out of the wreckage every day.
Ari’yonnia, a Stuart Middle School student, goes to school, but sometimes doesn’t stay all day.
She has a sister and four brothers, and said she barely sleeps.
Harris said Ari’yonnia hates fire.
She sees changes in her daughter.
Harris wants justice for those who died, but wants the same for her daughter. She wonders about charges against Dashner related to her daughter.
Law enforcement officials have not addressed that publicly in the past, and Florida Highway Patrol officials could not be reached late Thursday.
The Naya Pakistan Housing Scheme is a great initiative, but can it survive the curse of corruption?
More than 125,000 forms have already been downloaded from the NADRA website.
In keeping with the theme of ‘change’, the Pakistan Tehreek-e-Insaf (PTI) government recently launched the Naya Pakistan Housing Programme, aiming to build five million homes in five years. It is evident from the very start that a project of this magnitude will require a lot more input than just land, which the government will be providing. And while they say they will not be involved in construction directly, arranging funds to provide basic amenities to residents alone will be a herculean task.
We have launched our most ambitious, landmark housing policy of building 5mn homes in 5 yrs. InshaAllah this will provide affordable houses for our less privileged strata of society, plus 6mn jobs, create demand in 40 industries directly involved in house building & attract FDI.
Though there is no clear framework yet and there remain more questions than answers at this stage, the scheme has managed to generate enormous public interest, as more than 125,000 forms have been downloaded from the National Database and Registration Authority (NADRA) website, temporarily affecting the site itself. The project, which was initially launched for seven cities, has now been extended to 10 more cities in Punjab.
Detractors are of the view that this is just an announcement, and that nothing concrete will take place over the years. The biggest criticism thus far has been towards the fact that the funds-starved government does not have the budget to initiate this scheme. Although the state has remained mum on budgetary matters, the amount of $180 billion has been suggested, which of course seems unfeasible and unrealistic. Provincial Housing Minister Mian Mahmoodur Rasheed also revealed that this project will be a public-private partnership. A land bank will be created through which the government will provide land to builders, who will then be responsible for constructing the houses. Concerns have subsequently been raised over the transparency and monitoring of the construction, to ensure no money is set aside by compromising on the quality of the construction.
In my view, the launching of this initiative is a step in the right direction, but the road is full of bumps and obstructions.
Cuba, Norway and Singapore are the only countries in the world to have successfully launched public housing schemes, but they did so roughly four decades ago, and their population is significantly low in comparison to Pakistan. India has a ‘housing for all’ initiative and has set a target for the year 2022, with over 1.7 million houses getting a nod from the central government. If our government is serious in carrying its initiative forward, it can either follow the pattern of one of these successful efforts or can come up with its own footprint to complete this scheme.
Within Pakistan, we have limited success stories when it comes to the public housing sector. In Karachi, for instance, the government built houses for employees of the federal government in the 50s, now known as the Federal B Area and Buffer Zone. The former got its name because ‘B’ class residential apartments were built for the lower grade staff, while the latter was called so because it acted as a buffer between the housing scheme of upper and lower grade employees.
Unfortunately, Pakistan’s ratio of mortgage financing to gross domestic product is extremely low, at 0.25%, especially when compared to the South Asian average of 3.4%. The government will thus have to revise banking rules and provide easier ways to obtain financing facility. Our banking rules for common people are so stringent that in order to obtain a bank loan, people feel they have to prove they don’t really need one. However, housing finance is a safe bet for any bank, and I am confident that banks involved in this project will get their instalments paid on time, depending on how thorough the investigation is before sanctioning the required loan.
The House Building Finance Corporation (HBFC) should also be involved in the financing of these houses. HBFC was an active lender in the housing sector for decades, but it seems the public has now lost trust in this institution. However, its involvement will boost this scheme and may provide the impetus required for such a mega project to succeed.
Other than constructing the houses, there is the matter of providing gas and electricity. In this regard, alternate energy methods such as solar and wind should be considered for electricity, and liquefied petroleum gas (LPG) for cooking purposes. Such alternative options are being used by many new projects in big cities domestically, and in an energy-deprived state with a budding population, these inclusions could make a positive impact.
Yes, if this project bears fruit it will indeed not only provide housing but also millions of jobs, but it must be noted that this is a long-term project which will ultimately require more than five years to truly complete, which is why protecting the scheme via laws is also essential so that future governments carry it forward instead of rolling it back.
Irrespective of the project’s success or failure, PTI’s government will do a great favour to this nation by keeping this scheme transparent and corruption free, which has always been a problem in the past. Political leaders have suffered and faced the court of law due to corruption done through mega projects such as these. In 1987, former prime minister Mohammad Khan Junejo launched the ‘Apni Basti’ scheme to build 130,000 low-cost houses, but ended up constructing only 35,000. The scheme had many mistakes, including ill-suited locations, poor pricing, a lack of basic amenities, and of course, the end of Junejo’s tenure. The most relevant example is the investigation and arrest of Shehbaz Sharif due to his alleged involvement in the Ashiyana housing scam. For the sake of its anti-corruption narrative alone, the PTI government would not want Imran Khan to face a corruption trial five years from now.
The PTI government has stated that Junejo’s effort failed because construction was initiated without evaluating demand, which will not be done in the new scheme where demand will be assessed first, thus the forms. Further, in the past, it was the state that took responsibility of construction, which also led to uncleared dues that affected the project. This will also not be the case here, as contractors will not be paid by the government but by the banks and non-bank financial institutions (NBFIs) who are to finance this scheme.
In Pakistan, builders and developers have built a large number of housing schemes for private gain; this is now a test for them to build low-cost housing projects on land provided by the government. In Karachi, for instance, the recent development of Gulistan-e-Jauhar and its adjoining areas is a prime example of fast track development. Fast developments in such areas are an encouraging factor for the government, which can take heart from the fact that if the private sector alone can build houses and convert deserted areas into developed and commercial ones, then with public-private partnerships the potential for development is unimaginable. If everything goes to plan, people may actually get a decent living facility at low cost, while development may be more symmetrical across the country.
PTI has always showed its displeasure over mega projects launched by its predecessors. Now that it has initiated its own as part of the government, there seems to be a realisation that not only do such initiatives bring along human development, they also lure supporters and enhance approval ratings – but only if they appear to be fiscally sound. It is thus in the best interests of the state to reveal a detailed, clear and precise plan in order to keep the process transparent and the public up-to-date. If they manage to do so, I remain optimistic that the strategic differences possessed by the Naya Pakistan Housing Scheme will prove decisive in the success of this scheme.
The IDF and Civil Administration issued on Tuesday a demolition decree announcing the state's intention to demolish the home of Muhammad Taraireh, the terrorist from Bani Naim who murdered 13-year-old Hallel Yaffa in her bed in Kiryat Arba last week.
Taraireh was shot dead by an armed civilian response team during the attack. Meanwhile, security forces nabbed seven suspects across the West Bank in overnight raids between Monday and Tuesday, who allegedly took part in terrorism, and violent disturbances, attacking Israeli civilians and security forces. The suspects included two wanted Hamas members in Nablus, and a third Hamas member in Awarta, southeast of Nablus.
A fourth Hamas man was taken into custody in Tubas, north of Jericho.
IDF soldiers also seized locally produced firearms in arms raids in Beit Fajr, southwest of Bethlehem.
A woman charged with killing a 22-month-old girl withdrew an insanity plea and pleaded not guilty to first-degree reckless homicide. The La Crosse Tribune reports that 23-year-old Amanda Butts of Osseo changed her plea on Tuesday, will be tried later this year in Trempealeau County Circuit Court.
Butts is charged with first-degree reckless homicide in the June 22 death of Alexis Behlke, her boyfriend’s daughter, by giving her Oxycodone and Benadryl. While Butts, who cared for the girl while her boyfriend was at work, told police the toddler had been whiny all day and wouldn’t sleep, the child’s siblings gave a different account, telling investigators they saw Butts throw the girl to the floor and push a pill down her throat, according to the criminal complaint.
Cambridge-based Biogen’s stocks took a nosedive after the drugmaker scrapped its once-promising drug candidate for treating Alzheimer’s disease, wiping more than $18 billion off its market value at Thursday’s close.
Biogen and its Japanese pharmaceutical partner Eisai said Thursday morning it is pulling the plug on two late-stage trials of aducanumab — an experimental drug that would slow or halt the progression of Alzheimer’s.
According to the companies, the two trials were testing aducanumab in patients with mild cognitive impairment due to Alzheimer’s and mild Alzheimer’s disease dementia. The decision comes after an independent audit concluded the drug was unlikely to be effective in helping patients with Alzheimer’s.
Biogen is the latest in a series of biotech companies to abandon research on Alzheimer’s treatments in recent years due to mounting costs and futile efforts. Last year, Pfizer said it would terminate its research on Alzheimer’s and Parkinson’s drugs, laying off more than 300 employees in Massachusetts and Connecticut.
According to the Alzheimer’s Association, the terminal disease kills more Americans than breast cancer and prostate cancer combined — affecting an estimated 5 million Americans and tens of millions globally. No drugs have been approved to treat the underlying causes of the terminal disease that destroys memory and other important mental functions.
Biogen’s shares closed down 29 percent Thursday at $226.88. At the close of trading Wednesday, the Cambridge-based company had a $63 billion market value.
Published: March 4, 2017 at 06:35 p.m.
Updated: March 7, 2017 at 10:23 a.m.
John Ross, Washington, WR: Whenever a prospect shatters the 40-yard dash record, scouts will take notice, especially when it's a blue-chip prospect with a polished overall game. That's why Ross is poised to make a serious climb up draft boards after posting a 4.22-second time in the 40 that confirmed his explosiveness as a playmaker. Though Ross was unable to finish the workout due to a series of cramps, he certainly caught scouts' attention with his blistering run down the track. He can save that energy for his pro day next Saturday (March 11).
Deshaun Watson, QB, Clemson: The Heisman finalist continued to cement his reputation as a big-moment player with a strong performance here at the combine. Watson flashed his athleticism when he clocked a 4.66-second 40 that surprised scouts who were expecting the 6-foot-2, 221-pound dual threat to post times in the mid-4.7 range. While Watson was expected to check the box as an athlete, he showed evaluators he has the tools to be an effective quick-rhythm passer at the next level. He displayed pinpoint accuracy on short and intermediate routes, including speed outs, curls and digs following a traditional five-step drop. Although he missed the mark a bit on a few deep throws (go-routes), the Clemson star was so efficient as a connect-the-dots passer that scouts will still give him glowing marks for his work on the day.
Chris Godwin, WR, Penn State: It might be time to pay closer attention to Godwin after he put on an impressive showing on Saturday. He posted a 4.42-second 40 that certainly surprised plenty of scouts in the stands. He followed up his outstanding track performance with a strong pass-catching exhibition that showcased his strong hands and exceptional ball skills. Godwin not only plucks the ball out of the air effortlessly but he does so while flashing ballerina-like footwork and body control along the sideline. With a strong career resume that suggests he has the tools to be an effective WR1, Godwin will continue to creep up the boards as one of the draft's hottest prospects heading into pro-day season.
Evan Engram, TE, Ole Miss: More NFL teams are looking for "H" tight ends with the speed, quickness and athleticism to create mismatches on the perimeter. Engram was certainly viewed as one of the best hybrid tight ends in the 2017 class following his solid week of work at the Senior Bowl. He cemented his status with a blistering 4.42-second 40 and a solid positional workout. Engram runs routes like a slot receiver, yet offers teams a big-bodied pass catcher with exceptional route-running skills to target on critical downs (third-down and red zone). Considering the impact that Jordan Reed and other hybrids have had on the game, Engram's stock is bound to rise following his performance in Indy.
Brad Kaaya, QB, Miami: The Hurricanes' QB1 didn't have his fastball working during the positional workout on the turf. Kaaya missed on a handful of throws at intermediate and deep range that highlighted some concerns about his arm strength and accuracy. In addition, he failed to address concerns about his athleticism when he elected to sit out the 40. While a workout doesn't replace the film, Kaaya's ho-hum showing will make it hard for scouts to sell him as a franchise quarterback in some rooms.
Isaiah Ford, WR, Virginia Tech: The Hokies' big-play receiver was expected to dazzle evaluators with his speed and explosiveness in drills, but scouts came away disappointed in his athleticism after he posted a pair of 4.6s in the 40. He further damaged his stock with a handful of drops that raised more questions about his hands and pass-catching skills. Although Ford will have a chance to make amends for the poor performance at his pro day on March 15, he missed out on a chance to impress evaluators looking for a potential game-changer on the perimeter.
Cooper Kupp, WR, Eastern Washington: The small-school standout was enjoying a magic carpet ride up the charts following a spectacular week of work at the Senior Bowl. Scouts were discussing Kupp as a potential top 40 pick with plenty of teams viewing him as a potential WR2 in the right system. That narrative will certainly change after Kupp clocked a pair of 40-yard dashes in the 4.6-range and looked nothing like an explosive playmaker on the perimeter. Sure, the scouts will go back to film and assess his dominance against Big Sky competition, but the pedestrian 40 will make it hard to cast him as more than a WR3 in meetings.
The pass rushers and linebackers take center stage on Sunday. Scouts will take a long, hard look at Texas A&M's Myles Garrett to see if he is a really a super hero on the edge. After impressing scouts with his chiseled frame at the weigh-in, the Aggies' star simply needs to flash the speed, quickness and burst to blow past blockers on the edge. Tennessee's Derek Barnett, if he can participate after suffering an illness in Indy, and Stanford's Solomon Thomas will also have a chance to impress evaluators with their athleticism and movement skills. Each rusher is expected to exceed athletic expectations, which could lead to a surge up the charts.