Lynch Stock Picks - Hanes, The Limited, and Finding Winners in Everyday Life

Your wife comes home from grocery store with pantyhose in a plastic egg. Your teenager drags you to some clothing shop at the mall. You drive past ranch land every day and never think about who owns it. A nickel miner you analyzed years ago collapses to a fraction of its old price. A company that washes greasy auto parts keeps growing earnings and nobody cares.

Five investments visible to millions of ordinary people long before any Wall Street analyst wrote a research note. The best opportunities hide in plain sight – too simple, too boring, or too ugly to look like real investments.

Hanes and L’eggs – The Pantyhose That Became a Six-Bagger

The story starts at a supermarket checkout counter. A wife notices a freestanding metal rack displaying women’s pantyhose packaged in colorful plastic eggs. The brand is L’eggs, made by Hanes. She tries them. Heavier denier that resists runs, good fit, and most importantly – you buy them right next to the bubble gum and razor blades without a special trip to the department store.

Hanes had done their homework. Women visited department stores roughly every six weeks. They went to the grocery store twice a week. Twelve chances to buy L’eggs for every one chance to buy the regular brand. Simple math, devastating competitive advantage.

When Hanes interviewed women leaving test supermarkets, a high percentage confirmed they had just bought pantyhose. Most could not recall the brand name. Hanes was ecstatic. A best-seller without brand recognition means marketing has not even started working yet.

The stock became a six-bagger before Consolidated Foods acquired the company. Without that buyout, it could have been a fifty-bagger.

Millions of people had the information they needed. Two or three years after L’eggs went national, you could walk into any supermarket and see the evidence. You still would have tripled your money buying at that point. Meanwhile, the “Designated Investors” were busy losing money on solar energy and satellite dish stocks. The best investment was in the grocery cart.

You do not need to be early. You need to pay attention to what is selling, ask who makes it, and do basic analysis.

The Limited – From Shopping Mall to 100-Bagger

The Limited went public in 1969 through a small underwriter in Columbus, Ohio. Wall Street did not care. Columbus was not a corporate destination and nobody was flying out to cover a small clothing retailer.

One analyst followed the company. A second discovered it by accident – stranded at O’Hare during a snowstorm, she wandered into the Limited store at Woodfield Mall in Chicago. She paid attention to what she saw.

The first institutional buyer came in 1975. By then, one hundred Limited stores were already open. Thousands of shoppers could have done their own “analysis” just by walking in.

By 1979, only two institutions owned the stock – 0.6 percent of outstanding shares. Employees and executives were heavy buyers. Always a good signal.

By 1981, four hundred thriving stores and only six analysts covering the stock. By 1983, investors who bought in 1979 at fifty cents per share (split-adjusted) were up eighteen-fold at nine dollars.

When the stock dropped to five dollars in 1984 despite strong business performance, that was a buying opportunity, not a reason to panic. By 1985 it recovered to fifteen dollars. Then Wall Street woke up. Analysts fell over each other to add The Limited to buy lists. Institutional money pushed shares to nearly fifty-three dollars – well beyond fundamentals. By then, thirty-seven analysts were covering it, most arriving just in time to watch it fall off a cliff.

From fifty cents to fifty-three dollars. A hundred-bagger. The individual investor who bought before institutions arrived and sold when their buying pushed prices to irrational heights multiplied capital by more than a hundred.

This is the “Street lag” effect. Stocks outside the institutional universe trade at low valuations. When institutions discover them, the buying itself drives prices higher. The early investor benefits from both business growth and valuation expansion.

Asset Plays – Hidden Real Estate, Cable Subscribers, and Land

Sometimes value is not in earnings but in physical assets carried on the balance sheet far below their true worth.

Newhall Land and Farming owned the Cowell Ranch in the San Francisco Bay area and the larger Newhall Ranch, thirty miles north of downtown Los Angeles – planned community, amusement park, industrial complex, developing shopping mall. Hundreds of thousands of California commuters drove past it daily. Real estate agents, mortgage bankers, appraisers all knew California land values were skyrocketing. Twenty-bagger from the early seventies, four-bagger from 1980.

Alico was a mundane Florida cattle company at the edge of the Everglades. Scrub pine, a few cows, twenty employees trying to look busy. You could buy at under twenty dollars per share. A decade later, the land alone was worth over two hundred.

Cable TV was the asset play most investors missed. Telecommunications, Inc. sold for twelve cents a share in 1977 and thirty-one dollars ten years later – 250-fold. Earnings were poor, debt worrisome, traditional metrics unattractive. But each cable subscriber was worth two hundred dollars, then four hundred, then a thousand, then twenty-two hundred. Industry people tracked these numbers openly.

The lesson: when assets are clearly worth far more than the stock price, weak earnings are not reasons to avoid. They are the reason the opportunity exists.

International Nickel – The Turnaround That Took Seventeen Years

Companies do not stay in one category forever. International Nickel – Inco after 1976 – was first a growth company, then a cyclical, then a turnaround.

In December 1970, a young analyst wrote a sell on Inco at forty-eight dollars. Nickel consumption slowing, producers adding capacity, labor costs rising. The stock went sideways for months. Portfolio managers who sold grew nervous. Then reality caught up. Twenty-five dollars in 1971. Fourteen in 1978. Eight in 1982.

Seventeen years after recommending the sell, the same person – now an older fund manager – bought a large position as a turnaround.

Companies change categories. A sell at forty-eight on deteriorating fundamentals becomes a buy at eight on turnaround prospects. Same entity, same assets. Different price, different expectations, different potential.

Too many investors either cling to a stock because it was once great, or permanently remove a name because it once disappointed. Both reflexes are wrong. When a formerly dominant company trades at rock-bottom prices with a realistic path to improvement, the risk-reward shifts dramatically in your favor.

Boring and Unloved Stocks – The Uglier the Better

If you want to find overlooked investments, look for businesses that make people shrug, yawn, or recoil.

Safety-Kleen went around to gas stations with a machine that washed greasy auto parts. Periodically, the Safety-Kleen crew came back to haul away the dirty sludge for recycling. No glamour. No TV miniseries. No analyst eager to write about it. And an unbroken run of increasing quarterly earnings, year after year.

Envirodyne made plastic forks and straws. One subsidiary produced intestinal casings for hot dogs and sausages. Another made PVC film for wrapping leftover food. Plastic forks, hot-dog casings, plastic wrap. Earnings went from thirty-four cents per share in 1985 to two dollars in 1987, and the stock went from three dollars to nearly thirty-seven dollars. A twelve-bagger in three years from a company whose main products showed up at family picnics.

The dream stock: boring company, disgusting business, inconvenient location, odd name, recent spinoff nobody followed. Add insider buying, consistent earnings growth, no debt, recession resilience, and a product so simple any fool could make it – but run by top management with a large personal stake.

Ignored by every institution, unfollowed by every analyst, available at a bargain. Compounding earnings while nobody watches.

These businesses exist in every market cycle. The problem is not finding them. The problem is having discipline to buy something that makes you feel nothing when everyone around you is excited about the next technology revolution.

The Patterns Across All Five Cases

Look at what connects these investments:

Visibility without recognition. Millions of people saw L’eggs in grocery stores, shopped at The Limited, drove past California ranch land, and paid cable bills. The information was public. The investment thesis was not hidden. People simply did not connect what they saw as consumers to what they could do as investors.

Institutional absence. In every case, the biggest returns happened before Wall Street arrived. Once thirty-seven analysts cover a stock and every institution owns it, the easy money is gone. The stock is priced for perfection and any stumble gets punished.

Simplicity as advantage. Pantyhose. Clothing retail. Land. Grease-washing machines. Plastic forks. None of these required an engineering degree to understand. That simplicity meant investors could hold with conviction because they understood what they owned.

Patience with ugliness. Asset plays with weak earnings. Turnarounds with years of decline. Boring businesses nobody wants to discuss. The psychological cost of holding these positions is high, which is precisely why the financial reward is also high.

Key Takeaways

Use your eyes before your spreadsheet. The best stock tips come from grocery stores, shopping malls, and your daily commute. If a product or business is clearly winning customers, check who makes it and whether the stock is reasonably priced.

You do not need to be first. Hanes was profitable years after L’eggs launched. The Limited was an eighteen-bagger long after stores were already spread across the country. Being early is nice. Being observant is enough.

Avoid the crowd, follow the insiders. When institutions own less than one percent of a company and executives are loading up on shares with their own money, pay attention. When thirty-seven analysts cover a stock and every fund owns it, move on.

Embrace boredom. The less exciting a business sounds at a dinner party, the more likely it is to be undervalued. Glamour commands premium valuations. Obscurity creates discounts. You want to buy discounts.

Reclassify constantly. A growth stock can become a turnaround. An asset play can become a growth story. Do not put permanent labels on companies. Reassess the fundamentals, the price, and the category regularly. The best investment in International Nickel was not the growth phase – it was the turnaround, seventeen years later, at one-sixth the old price.

Investing is not about finding the complicated thing nobody understands. It is about finding the simple thing everybody sees but nobody acts on. Your daily life is full of investment data. It requires paying attention, doing basic homework, and having the courage to buy what others consider beneath them.