Arden Group Bought Out

On Friday, the news came out that Arden Group ($ARDNA) will be bought out by TPG for $126.50 per share. Arden owns a few Gelson’s supermarkets in Southern California.

The reason why this is interesting is that Arden has been one of the most successful — and least known — micro-cap stocks around. The company has just three million outstanding shares. The only split I see is a 4-for-1 split in 1998. Arden almost never makes the news.

But check out this long-term record. Since 1978, shares of ARDNA are up 29,317% compared with 1,812% for the S&P 500. That’s amazing; it’s an annualized gain of 17.6% per year and it would have turned an investment of $34,000 into $10 million. It’s even more impressive when you consider that ARDNA hasn’t been a strong performer over the past five years or so.

No one on Wall Street follows ARDNA, and no one talks about them. But Arden has been a huge winner in a dull business. The stock usually trades less than 10,000 shares per share, and it’s not uncommon for daily volume to fall below 1,000 shares. Novice investors often assume that a good investment must be some company that’s trying to invent the 12th dimension. Not at all. There are lots of small, boring businesses that are hugely profitable. But being up 300-fold in 35 years is truly rare. Congratulations to Arden on their buyout.

Posted by on December 22nd, 2013 at 1:43 am


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