In Ruettiger’s only game, the final contest of his senior year, he sacks NFL-bound Georgia Tech quarterback Rudy Allen (yes, he was also named Rudy) and is carried off of the field by his teammates – one of only two to have that honor in Notre Dame football history. To learn more about his journey, I recommend the biographical film “Rudy,” by David Anspaugh.
INVESTING IN UNDERDOG COMPANIES
Many of today’s strongest companies were underdogs in their infancy – mostly due to pessimism about the business model compared to the establishment. The technology sector seems to have produced a venerable Mount Rushmore of underdogs, each with incredible storylines of tenacity, hard work, overcoming great odds and disappointment: Bill Gates, Steve Jobs, and Jeff Bezos, to name a few.
Home Depot was once an underdog. After getting fired from Handy Dan in 1978, Bernie Marcus and Arthur Blank left their disappointment behind and founded Home Depot, Inc. to be “the one-stop shopping for the do-it-yourselfer.” Today, Home Depot has an economic value of over $250 billion.
Way before earning millions of subscribers around the globe and many Emmy Awards, Netflix was an underdog. In fact, Blockbuster famously passed on the opportunity to buy Netflix for $50 million in 2000. Today, Netflix has an economic value of over $150 billion. Blockbuster filed for bankruptcy in 2010.
From an investing perspective, underdogs can make pretty good investments. Warren Buffett, among many other great investors, believes that buying stocks with solid fundamentals when they are out of favor presents an attractive opportunity.
The stocks of Microsoft, Apple and Amazon would have been great buys back in the early 1980s and 1990s, but at the time, would you have thought so? No one thought Amazon would do well selling books online. After all, you buy books in bookstores, right? Clearly, they were right and the world was wrong.
The question is: would you have seen it then? It is one such question we try to answer when investing for clients at TCO. We try to buy not just for today, but look through the financials, news, and sentiment to see their potential for the future. Just as coach Brooks looked past a dominant Soviet team, and just as Ruettiger looked past his physical shortcomings.