WTF Business Models

Beer is just suds, unless you call it “craft beer.” When Internet stocks were hot -- around the same time as cigars -- few understood the new technology’s whizzes and whirrs, but everyone grasped the importance of a tall, cold one. This launched strong IPOs from Boston Beer (SAM), Red Hook Ale (HOOK) and Pete’s Wicked Brewing. The Gambrinus Company acquired Pete’s in 1998, adding it to its Shiner, Tappeto Volante, Bridgeport Ales and Trumer Pils names.

Premium cigars and craft beer weren’t bad investments - they just weren’t stocks to buy and hold.

Going to the dentist makes fingernails across a blackboard seem like Mozart, but it’s a good sector following an established business plan. Rollups in the sector include Birner Dental (BDMS), American Dental Partners (ADPI) and privately held Bright Now! Dental. The bet: Economies of scale, coordinated advertising and focus on billing as well as other operational chores frees dentists to concentrate on their patients.

The first transcontinental railroad was completed with the driving of a golden spike at Promontory Summit, Utah on May 10th, 1869, and the basics of the industry remain unchanged. Railroad mergers started in the late 1950s and have yet to create a coast-to-coast line, but have led to five major companies: Norfolk Southern (NSC), CSX (CSX), Union Pacific (UNP), Burlington Northern Santa Fe (BNI) and Kansas City Southern (KSU). The major railroads stress long-haul service and have sold off branch lines that have been assembled into profitable, generally non-union operations. Genesee & Wyoming (GWR) operates about 50 regional railroads and short lines, Pioneer Railcorp (PRRR) operates about 15 lines and RailAmerica, acquired by Fortress Investment Group (FIG) in 2007, runs about 40 railroads.
 

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Privately held L.L. Bean takes orders over the phone and via the Internet, but the mail order business has changed little since Sears published its first specialty catalog in 1908. Like any successful retailer, Bean stresses quality, selection, price and service. There are now many specialty catalog retailers, including Coldwater Creek (CWTR) and Lands’ End, a subsidiary of Sears Holdings (SHLD). For art lovers, catalogs from Victoria’s Secret, a division of Limited Brands (LTD), can’t come fast enough. J.C. Penney (JCP) is a nationwide department store chain and a general merchandise catalog retailer.

But time and attitudes march on. Even nerds aren’t dorky enough to be caught dead wearing anything with Playboy’s bunny ears logo and the girlie mag empire recently announced plans to launch a softcore gay porn cable channel.

Come to think of it, whatever happened to Hugh Hefner’s 250,000-word Playboy Philosophy? Did it ever achieve climax, or did it just peter out?

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