FR: Turn Trash Into Treasure With This Stock

Article: Turn Trash Into Treasure With This Stock

My next “Fool Revisited” piece was one that was inspired by something I read at the time. We were taught during our Writer’s Development Program that one of the best ways to become a better writer was to read more. By exposing yourself to different writing styles and word usage, it can sometimes make it easier to craft sentences and make points, as well as inspire pieces for your own writing that piggyback off similar ideas.

This article was exactly that. I believe I read a Forbes article about Swisher Hygiene under the stewardship of Wayne Huizenga, a co-founder of Waste Management and serial entrepreneur. Because of his success at previous businesses – Blockbuster and AutoNation were other successes for him – I thought it might make an interesting case study to look if he could bring his magic touch to the small-cap Swisher Hygiene, a service company that did various commercial cleaning tasks for smaller businesses in smaller markets.

Huizenga was heading down the same path with Swisher as he had with his previous companies; they would acquire smaller operators and bring them under the Swisher corporate name, turning “Big Frank’s Commercial Cleaning” into a franchise of Swisher and trying to build the brand – and company – through acquisition. It seemed to be working, though at time I wrote the article, the company was not yet profitable after re-emerging in the public markets in 2010, partially because of all the debt associated with the acquisitions.

The strategy never really seemed to get Swisher off the ground as hoped, and most of Swisher was acquired by its much larger competitor Ecolab (NYSE: ECL) in November 2015 for $40 million. This was shortly after Huizenga and his business partner were sued for misrepresenting an earlier sale of Swisher stock, leading to indictments of two former Swisher executives. While the Swisher fiasco may have tarnished Huizenga’s reputation a bit more recently, he is still remembered best for his previous deals.

The Swisher story is one example of tying your hopes for a stock to the leader at the company, as well as proof that past results don’t always represent what to expect from future performance. Huizenga had over 50 years of success in business after his founding of Waste Management, and that reputation was burnished over subsequent decades. But as the end of Swisher Hygiene shows, sometimes Midas’ golden touch wears of and you are simply left with brass.

Until next time…

Disclaimer: I do not own currently own shares in any of the mentioned companies, and I have no plans to purchase shares of any company within the next 60 days in any account in which I manage investment funds. You can read a little about my personal investment philosophy here.

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