There are various ways that you can make (or lose) money in the stock market.  These returns can be boiled down to:

  1. Dividends or other cash payments
  2. Changes to the intrinsic value of the underlying company
  3. Changes to Mr Market‘s mood (and therefore share prices)

But there is another way.

As a value investor you’re looking to buy companies that are priced attractively, but you’re not the only player in town.

There are other investors and companies out there that also have capital to deploy and if something looks attractive to you it may well look attractive to them too.

That’s exactly what happened with Robert Wiseman Dairies, a company I picked up back in May 2011 for 3.17p per share.

It seems that I wasn’t the only one out there that thought this major milk company might be worth more than that.  Muller Group (yes, the ones that make the yoghurt) have recently agreed to take over RWD at 3.90p per share.

What does that look like?  See for yourself:

So I bought in at 317p in mid-2011, just in time to watch the share price drop off (another) cliff down to 250p.  Anyone who invests with a stop-loss would have likely been kicked out and then kicked themselves as they missed the Muller-bounce to 390p.

Let’s go back and see exactly why this industry leader was so attractive to both me and Muller.


Did I use magic powers to see the value in RWD?

No, I used a checklist.

First of all, regarding the company:

Do they bring diversity to my existing portfolio?

Yes, I didn’t own anything like a milk dairy and distribution company at the time.

Are they:


Not really!  At the time size didn’t matter to me quite as much as it does now (they are listed on the small cap index), but they’re not a tiddler with a market cap of almost £300m.


Yes.  They are either the leading milk distributor or they’re one of the big three, depending on who you ask.


Yes.  They’ve made a profit in every one of the last 10 years and have always paid a dividend in that time.  The trend in earnings over the long term is upwards.

Are they conservatively financed?

Yes.  At the time the interest payments were covered…

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