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Let’s try something new today.
The Community is an amazing place where all Partners share investment ideas daily.
Just look at this example of Craig Edwards about Infratil ($IFT):
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Infratil is up 4,000% since its IPO in 2000.
It gave me an interesting idea…
… What if we launch a stock market competition between Partners?
Every month, Partners can pitch their favorite investment idea. Other Partners can vote for their favorite stock idea.
The winner of the month receives a free subscription to Compounding Quality for 3 months (value: $124).
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In this article, these three stocks will be pitched:
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1. Nathan’s Famous ($NATH)
How does the company make money?
Nathan’s Famous ($NATH) makes money by selling branded hot dogs through retail, food service, and franchise restaurants.Boris Sheikman wrote an amazing case about Nathan’s Famous.
Here are the key takeaways in 10 bullet points:
Business model: Nathan’s Famous isn’t just a hot dog stand on Coney Island. It’s a 100+ year-old brand with a surprisingly smart and scalable business model.
They don’t make their own food: Nathan’s doesn’t own factories or cook the hot dogs themselves. Instead, they license their secret recipes to big food processors like Smithfield. It’s low-cost, high-margin, and scalable.
Big sales behind the scenes: They sell Nathan’s-branded products in bulk to big foodservice companies like Sysco. You’ll find them in stadiums, restaurants, and amusement parks (not just at the grocery store).
A small but growing franchise empire: Nathan’s has 230 franchise locations (most in the US, some abroad). There’s real growth outside the East Coast.
Marketing that pays instead of costs: Nathan’s generates revenue through events and sponsorships, turning marketing into a profit center. Like their famous Hot Dog Eating Contest.
They own just 4 restaurants: Nathan’s runs four company-owned stores, including the original Coney Island flagship. These serve more as brand beacons than core revenue drivers.
Lean and light: They don’t need heavy equipment or big inventory. Production is outsourced. The result: a lean, asset-light business with high returns and low operating risk.
The moat is in the meat: The real power lies in the brand and the original recipe. Like Coca-Cola or KFC, Nathan’s has a “secret formula” that gives it staying power and pricing strength.
Quiet compounding: Revenue and gross margins are stable and growing. The company pays a solid dividend, buys back shares, and steadily reduces its debt.
Skin in the game: Insiders are well-aligned. The CEO owns nearly 2% of the company, and compensation is tied to performance.
Under the radar: No earnings calls. No media hype. Just a 100-year-old hot dog brand compounding quietly in the background.
You can read the full 11-page investment case of Boris Sheikman here:
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