National Presto

Check out the 17-year chart of National Presto (NPK):

This is another great stock with zero analyst coverage. Also, there’s also not much media coverage. I found a Forbes article from 2009. The firm has a rather interesting history:

Presto started life in 1905 as Northwestern Steel & Iron Works, maker of 50-gallon commercial canners. Ten years later it moved into home canning and in 1939 introduced the first saucepan-style pressure cookers. World War II rationing of aluminum had it cranking out munitions. In 1944 Maryjo’s dad, Melvin S. Cohen, joined as a customer service manager; two years later he married the daughter of a large shareholder and soon shot up the ranks.

In 1960 Melvin became president just as conglomerators like Harold Geneen and James Ling were gaining admiration. He scooped up nine companies, including a door-to-door vitamin seller, a pipeline operator, a press-and-lathe refurbisher and a trucking business. Melvin’s appetite was matched by his eye for bargains. He earned praise from Benjamin Graham, who touted Presto in his value-investing bible, The Intelligent Investor.

When leveraged-buyout firms started bidding prices up in 1980s, Melvin put away his wallet and started selling. By the time Maryjo took the corner office in 1993 he had unloaded everything but the kitchen appliance business. By 1999, with the world awash in cheap money, Presto’s cash and securities came to 80% of its assets. The stock was as flat as a pancake on a Presto Tilt ‘n Drain Big Griddle.

Then things got ugly. A study by the New York Society of Security Analysts in 1999 blasted Presto for inept management. FORBES called the Cohen family rule a “farce.” Melvin took out an ad in Inventor’s Digest requesting ideas for new products into which he could pour some cash–565 came back, all rejected. In 2002 the Securities & Exchange Commission demanded that Presto register as a mutual fund company. When Melvin refused, the agency sued in federal court for violation of the Investment Company Act and won (though it lost on appeal).

Shareholders’ salvation: two stock market crashes and a menu of suddenly cheap assets that could balance out Presto’s kitchen appliance unit, which not surprisingly had to send production work abroad in order to stay competitive. After exiting the munitions business in 1992, Presto got back into it in early 2001 with the $5.6 million purchase of Amtec, maker of 40mm bullets for mk19 machines guns now used in Iraq and Afghanistan.

Posted by on February 25th, 2018 at 1:16 pm


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