Rush Limbaugh had a radio career as a disc jockey that provided little job security. He did a stint with the Kansas City Royals but still believed he could make a difference if he could get back on the radio as a conservative talk show host.
He got the opportunity in Sacramento, California. Some key investors liked what he was doing and believed it could go national.
All the radio experts said that this experiment would fail because all radio is local. Rush proved them all wrong and not only became a multimillionaire but launched a new industry of conservative talk shows throughout the country.
I started my own career in radio at the age of fourteen. And now I own radio stations in three states, thanks to Limbaugh saving AM radio as a medium and creating the influence of talk radio.
In countries with less freedom than the United States, Limbaugh’s pursuits would not have been possible.
They were possible in a nation that treasured freedom of speech and free markets.
In 2020 President Trump honored Rush Limbaugh with the Presidential Medal of Freedom, paying homage to his influence and his example of innovation and entrepreneurship.
Very close to incentive is innovation. Innovation in technology, methods, marketing and other areas distinguishes capitalism from other economic systems.
There are new inventions, new improvements on existing products that make them better, and new procedures and modifications that help systems operate more effectively.
The tyrannical governments of Europe in the 1700s supported the feudal system and provided no incentive for change and little benefit for new inventions.
The American experiment in liberty, free markets of capitalism and no aristocracy of nobility made the United States the real land of opportunity.
One such person who took advantage of that opportunity was a college student.
While attending the University of Colorado, he dreamed of opening a fine-dining restaurant.
With a $85,000 loan from his father, 28-year-old Steve Ells went to work. His idea was a hit…
See the story below…
Director, Prosperity Research
How Big Mac’s Mistake Could’ve Made You 2,700%
His goal was to sell 107 burritos per day…
Steve Ells and his father calculated that the store would need to sell that much to be profitable.
Within one month, the store was selling more than 1,000 burritos per day.
Today Steve’s dream is a reality … with more than 3,400 restaurants throughout the country.
And his net worth is $1.7 billion…
The restaurant chain he founded is Chipotle Mexican Grill.
When McDonald’s took an interest in Chipotle, it only had 16 stores in Denver.
Eight years later, McDonald’s helped Chipotle grow to 500 stores across the U.S.
Then, management made a fateful decision.
It’s still a sore subject after more than 15 years.
McDonald’s decided to focus on hamburgers instead of burritos…
Big Blunder
That’s the reason the company gave to shareholders when it spun off Chipotle.
And on October 5, 2006, McDonald’s shareholders automatically received shares of Chipotle in their brokerage accounts.
It’s a date that McDonald’s management would rather forget.
Because over the next decade, Chipotle shares soared. They’re now up more than 2,700%.
And today, even the mention of Chipotle gives McDonald’s executives indigestion.
But it’s a great example of how spinoffs create amazing opportunities for investors — if you know what to look for.
Wall Street’s Glitch
Spinoffs — like Chipotle’s — are often underpriced.
And that’s because of a glitch in the way Wall Street distributes the shares.
In fact, it puts big Wall Street institutions at a disadvantage.
However, for Main Street investors like you and me, the odds are in our favor.
But wanting to focus on a core business is just one reason that companies do spinoffs.
On Wednesday, I’ll show you another company that made the smart decision to spinoff. And I’ll share with you how Main Street investors like you can profit from them.
Regards,
Charles Mizrahi
Founder, Alpha Investor
