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Wednesday, March 18, 2015

THE STOCK TIP


THE STOCK TIP
I just saw an article about Krispy Kreme introducing a new doughnut.  It is a hotdog with bacon and raspberry jam in a sugar coated Krispy Kreme doughnut roll.  Sounds gross to me, but the article goes on to say that the Krispy Kreme Company needs to do something to stop their slipping sales and falling stock price.  It reminded me of the first time I ever heard of Krispy Kreme.

Years ago we were vacationing with friends in Myrtle Beach, South Carolina.  Our friends were from South Carolina.  While driving down the main drag of Myrtle Beach, my friend did a sudden full speed U-turn in the middle of the road to shift from south bound to north bound, a maneuver I had only previously seen in TV cop shows.

“Dude…WTF?”

There may have been some herbs involved.  OK, Mrs. Dude was on chemo and the herbs were for her…we probably shared some of her medication.

“Light’s on man!”

“What?”

“Light’s on at Krispy Kreme, that means they just pulled out a fresh batch of doughnuts.”

That is the first ever heard of Krispy Kreme.

We ordered a dozen.  I had a lemon filled sugar coated doughnut, and by “a” I mean three.  Fresh out of the oven, it was the best friggin doughnut I have ever tasted before or since.

At the time, Krispy Kreme was only found in the south, and it was privately owned.

About two years later, I learned that Krispy Kreme was going public and it was going to open stores all over the country.

The stock came out at about $10 a share.  I had just received my Christmas bonus and actually had enough left over after paying bills to invest as much as $1000.

I thought any company that could make a normally sane, albeit possibly a bit toasted, person risk his life with a flying U-turn through traffic just to get an oven fresh doughnut, had to be a company worth investing in.

I called my broker to put in an order. 

“Doughnuts!” He said, “You don’t want to invest in doughnuts, video rentals, that’s where the money is.”

I took his advice and bought some Blockbuster Video.  He was right about a previous investment idea, and talked me out of purchasing Priceline.com.  I was going to buy it at ten cents a share and he told me to steer clear.  It did fall to eight cents a share, so he knew stuff.

I haven’t seen a Blockbuster Video store for a while.

Anyway
Krispy Kreme was an initial success and in the first couple of years split several times and went to fifty bucks a share.  My thousand dollar investment would have gone to about fifty thousand dollars.  Realistically I probably would have bailed out at ten thousand dollars but…

Krispy Kreme did fall on hard times, due to management, not the product.  They still make the best doughnuts ever, especially if you get them right out of the oven.

Is there a moral to this? 

I guess it is when investing it is often good to go with your instincts and invest in a product that you really like. 

However, when they have to resort to adding bacon to their product you probably ought to sell.

25 comments:

  1. I don't think doughnuts and bacon should ever be together. Not even in the same sentence. We have Krispy Kreme here in Adelaide now, they opened a store last year way up in Port Adelaide and a few months later another one in the city, easier for me to get to. I haven't been there yet though, my favourite doughnuts are Gourmet Glaze, (owned by The Holey Doughnut Co) just as good as KK and have been in Adelaide for years and years.

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  2. "Ah, bacon!" as my friend Skip would say.

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  3. Bacon and jam - I'm struggling with that one ...

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  4. I just passed up a box of Krispiy Kreme being sold by the local boys baseball team as a fund raiser the other day. I do NOT need a box of doughnuts made by anyone even if they do taste like heaven or bacon. I donated some money instead.

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  5. I prefer plain cake donuts -- and cruellers -- like they have where my grandmother lived in New Jersey. Krispy Kreme were always too rich for me -- which is a good thing, calorie-wise, at least!

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  6. I know KK for their donuts, not their stock. Talk about an instant sugar high. Bacon is not a high, it is a low groan of pleasure.

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  7. I've yet to taste a doughnut that wasn't incredible fresh from the oven. I've been to Krispy Kreme a few times but the donuts weren't fresh from the oven and rather mediocre. Probably a good thing because I really should stay away from donuts. When one of these franchises opened in town the police had to direct traffic. Today there's hardly a line.

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    1. I'm confused...were the cops directing others to Krispy Kreme, or were THEY being directed to Krispy Kreme? :)

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  8. i went to one of their stores once when they were coming off the line. o.m.g!!! LOVED them. just not the same when you buy a box trucked to a store in a po-dunk area.

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  9. My first experience with Krispy Kreme was in Virginia...delicious. Then they opened in Texas, complete with all the hoopla you would expect, and found them to be...meh. Now they're reduced to boxing them and selling them at Walmart. And while I love bacon, I'll pass on combining it with a donut. I like my money invested right where it is...my Legends Of NASCAR Commemorative Plate Series. ;)

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  10. In Battle Creek, they have the Twinkie dog. Truly disgusting.

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  11. And then we wonder why the waistline of America is getting larger by the year.....Mmmmm...Had KK once in my life and that once was good enough.

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  12. I came to love glazed raised donuts made by a family bakery in my hometown. When KK opened a store here, someone brought a box to our office on the first day and those lovely donuts tasted like the ones from my childhood. I still have to close my eyes and walk on by whenever I see similar ones. With or without bacon, they are just not good for me (or anyone, I'd guess).

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  13. Pass the bacon and I hate donuts. They land in my gut and I'm sick for hours? I call donuts gut balls. I'll have ice cream please.

    Have a fabulous day. ☺

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  14. Reminds me of how my dad didn't invest in a Smoothie King. The one he would have co-owned is still open, making a killing.

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  15. I like bacon; I like donuts. I'm not sure I would like them together. I think we all have our "got away" stories when it comes to investments or things of value. I threw away the author of Eragon, Christopher Paolini, original book of Eragon that he had autographed for my daughter at a book signing in Montana before he was famous and was doing everything himself, publishing it, promoting it, etc. I found out later it was worth $5000. Oh well. we live and learn and sometimes in the process enjoy a donut along the way.

    betty

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  16. I love the original flavor Krispy Kreme glazed donut--that's enough for me. Your story about investing in the company reminded me of when my nephew was young, he wanted to buy stock in a new company known as "Apple." He was talked out of it back then, when it was only about a dollar a share. Can you imagine???

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  17. Think I would rather have my bacon on the side, hold the dog and jam.

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  18. When the first KK opened in OurTown a few years ago, I was curious to sample their wares and see what the fuss was about. When I actually tried one, I was. . . underwhelmed. I like my donuts cakey and substantial, and KK definitely goes more for the 'airy-fairy'. Even so, based on their reputation alone, I was still surprised when the place went toes-up after just a couple years. . . So, I guess, just based on what I've seen, I'm not surprised that their business is struggling. . .

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  19. Oven? I thought they were boiled in oil!

    Both of my boys love Krispy Kreme. The kids here sell them as a fundraiser for school clubs. When Genius was still at home, I always had to buy TWO boxes, because each boy wanted his own. I'm not a fan. Too sticky and messy, I can't imagine how many they would eat if they got a-hold of some FRESH donuts.

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  20. I first encountered Krispy Kreme when we moved from New York to South Carolina. I couldn't quite understand the hoopla about glazed donuts. They seem so plain and boring...I like apple fritters or donuts filled and/or covered with chocolate.

    I had a boss in South Carolina who told me a story about how his wife told him not to buy two acres of land on Hilton Head Island for $800 each...and he listened to her.

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  21. I love Krispy Kremes but SWMBO says they're not good for me.

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  22. Well, if I want sugar syrup I'll make my own slurry on bread. No need to pay KK for something so simply sticky

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