For many years, shareholders of Kansas City Southern earned meager returns while the railroad business struggled and the profits went towards the purchase of seemingly unrelated businesses like the the Janus Capital Group. For most people looking upon the sprawling railroad conglomerate in 1984, there wasn’t a lot to like. Only 6% returns on capital. No record of meaningful dividend growth. And the deployment of excess profits into an obscure mutual fund group with only thirty investors (albeit thirty wealthy investors as the total assets invested exceeded $500,000,000). If online investing existed in the mid 1980s, there is no stock screener you could have run or objective criteria you could have employed that would have alerted you to Kansas City Southern as a potentially lucrative investment.
Instead, you would have to take the bucket-and-shovel approach of digging through the statement and examining the growth of this mutual fund asset that … Read the rest of this article!