You can get your investment ideas anywhere. My worst ideas come from the business sections of the major papers. There's a simple reason: Everyone reads them, so there's nothing new. If everyone has the same information at the same time, what's your advantage?
My best ideas tend to come from the other sections of the paper -- the ones that aren't supposed to have investment suggestions, or certainly don't try to make them evident, since the reporters aren't business writers.
Take this weekend. I was reading a sad story in The New York Times about a prank played by a couple of Australian radio jockeys, who tricked a nurse into revealing information about the status of British royal Kate Middleton, and eventually led to a suicide by the nurse. Amidst this, a little tidbit about the Queen caught my eye. Let me quote it: "Four years earlier The Daily Mirror published a series of photographs of inside Buckingham Palace, showing that the queen's cereal was brought to the table in Tupperware containers."
I admit I was more focused on Tupperware (TUP) than I was on the actual thrust of the story, because I was scheduled to interview Tupperware's CEO Rick Goings Monday morning on Squawk on the Street. The takeaway here is a big one. Someone, somehow, sold the Royals some Tupperware containers. This is a reminder that Tupperware is a direct seller, not a retailer, but also not a mid-level marketing company for which the majority of the sales stay in the system. The product resonates with the most prestigious customer in the world.When I asked Rick this morning about who sold the Queen on the container, he demurred, basically saying that the Queen had good taste -- so of course she uses Tupperware. But what this reminds me is that unlike, say, Herbalife (HLF) or Avon (AVP), this is a pristine brand and a pristine company with an amazing balance sheet. The company is firing on all cylinders, particularly in Latin America, where women feel empowered to start their own businesses and augment the salaries of their husbands or strike out to get rich themselves. The organic growth of late, something that's akin to same-store sales, is about 6%. That laps some very difficult 10% comparisons. One of the most exciting stories behind the story of Tupperware is how the very populous Indonesia has become its best market amid the 66% of total sales that's generated in emerging markets. Indonesia revenue grew 30% in the most recent quarter, and that was on top of a 50% increase last year. India's is up 50%, too. To me these numbers speak to the universality of the concept around the world, and the acceptance that the product is superior to goods that can be bought in a retail store. Remember, there's no rent and no advertising. That allows Tupperware to pay the salesforce better than the traditional retailers can. I asked Goings this morning how he can police his company -- how he can make sure a big chunk of his sales don't just go to other people whom salespeople are trying to recruit as sellers, à la the Herbalilfe model. He made it clear that fewer than 10% of his customers are actual Tupperware sellers, and the rest consists of the retail consumer. That's good enough for me. One last insight: This company spews cash. When I asked Goings if he would return capital to shareholders in the form of a special dividend, he said the board is pondering just such an action. I bet they'll do it -- and it'll be still one more reason to own this high-quality direct seller whose stock sits a few cents from its 52-week-high.
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