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Here's What I Learned By Investing In Lindsay

Oct. 23, 2015 10:26 AM ETLindsay Corporation (LNN)3 Comments
William Bias profile picture
William Bias


  • Investors should keep their biases in check.
  • Industrial goods companies behave differently from consumer goods.
  • Investing for the long-term represents your best bet for investing success.
  • Lindsay’s solid balance sheet strengthens my holding resolve.

Source: Lindsay's website

On April 17, 2013, I bought shares in irrigation and infrastructure company Lindsay (NYSE: NYSE:LNN). My thesis stemmed from the fact that people will always need food and infrastructure for roads, railroads, etc. Moreover, at the time the company possessed rock solid fundamentals. However, Lindsay's fundamentals hit a brick wall in FY 2014. As a result, Lindsay's total return resides in the negative range at a gut wrenching 9% vs a positive total return of 39% for the S&P 500 (see chart below). Here are the lessons I have learned by owning this stock over the past two and a half years.

LNN Total Return Price Chart

LNN Total Return Price data by YCharts

Beware of hindsight bias

When I first bought shares in Lindsay I was blinded by the bright light of excellent past fundamentals for the previous three years. The company expanded its fundamentals pretty consistently during that time (see chart below). I was really suffering from hindsight bias. The only downside I considered for the company at that time was a possible recession. I didn't really think about other factors that could affect demand such as weather, government budgets, etc. This leads into the next thing that I learned the hard way.

LNN Revenue (Annual) Chart

LNN Revenue (Annual) data by YCharts

Industrial companies are different

Lindsay and its fundamentals reinforced to me that industrial companies vary from consumer goods companies, which represent my sector of choice. One of the biggest points for investors in industrial goods companies to consider is the absence of the repeatability of purchase. Candy consumers will buy bags of candies and when they run out will go back to the store to buy more. However, this doesn't necessarily happen with industrial goods.

A farmer may buy an irrigation system and not need another for years. A local government may

This article was written by

William Bias profile picture
I have been analyzing stocks since 1992 and a freelance writer since 2012.

Analyst’s Disclosure: I am/we are long LNN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (3)

Nice article. It is also worth mentioning that the dividend has increased 12 years straight and has increased at a high rate of growth:

1 yr. 116.3
3 yr. 44.7
5 yr. 27.9
10 yr. 17.6
Goose Hollow Investments profile picture
They have raised their quarterly dividend 1 penny for the last two years...these dividend numbers aren't right. That said, they did double it a couple of years ago and I anticipate the growth will resume at a faster pace when earnings start rising again. I like LNN a lot... it and VMI are very well positioned to earn some serious profits in the coming decades
William Bias profile picture
Hi Goose Hollow Investments,

I think that Lindsay will do well over the long term as well.

Thanks for reading,

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