🚨A quick word: I'll be a guest speaker at the Blossom Investor event in Chicago on Tuesday, October 7th. Grab a 15% discount with DAPPER15.🚨

This week is homecoming at my daughter's high school, and funny enough, my portfolio is having its own homecoming with a stock I've been watching for years.

[Quick side note: My original draft was 7 pages long. Huge shoutout to Claude.AI for helping me turn my novel into something people might actually read without needing a bathroom break!]

So, I heard this guy Stephen Farrington (calls himself the "Unemployed Small Cap Value Degen") on The Acquirers Podcast talking about how he finds mispriced small-cap stocks. I recommend listening to the full episode HERE.

He looks for company insiders buying - specifically the CFO (Chief Financial Officer) and General Counsel. These are the "pessimistic bean counters" who know where all the problems are hidden. When they're spending their own money on company stock, he pays attention.

Two stocks caught his eye: Portillo's (PTLO) and Crocs (CROX). Portillo's CEO, CFO, and General Counsel all bought in early August in the $7-$8 range.

Portillo's is a Chicago institution - I've known it my whole life and even met the founder Dick Portillo once while working at his home.

Dick sold the company for $1 billion in 2014 when it had 40 locations. Today, it has about 94 restaurants and the market cap is $456 million. We can buy it for less than half the price with double the stores!

Stephen shared some wild numbers too: Most restaurants do $1-3 million per location annually. Chick-fil-A crushes it at $7.5 million. But Chicago-area Portillo's? They're doing $10 million per location - including $600K just from salads!

The market is scared because:

They're expanding outside Chicago (will it work?)
The private equity owners have been slowly selling shares (looks like dilution but isn't really)
Restaurant industry is tough right now

Something important to know: When Portillo's went public, the private equity firm kept 50% of their shares as LLC units that weren't counted in the public float. As they've been selling these (down to 2% left), Yahoo! Finance shows the share count going up, which looks like dilution to retail investors and algorithms.

But no new shares are being created! They're just converting private LLC units into public shares and selling them. It's like moving money from savings to checking - same total amount, different bucket. The notes in the annual report explain this, but most people just see "rising share count = bad" and sell. Classic small-cap mispricing in action!

Their first Dallas location almost "broke" from doing $17 million in revenue the first year, forcing them to open up 5 more Dallas area stores. Also, their new rewards program got 22,000 members per location (Chipotle only gets 5,000).

My wife and I bought 100 shares at $6.15 because we know the business, love eating there occasionally, and think the nationwide expansion could work. If Chicago's diverse population loves it, why not everywhere else?

Alphaspread.com thinks the worst-case scenario intrinsic value shows 44% upside potential. We might buy another 100 shares if it drops below our $6.15 cost basis for a very long term hold.

This feels like a very low risk, high reward, local investment that I couldn't pass up.

Would you consider buying Portillo's stock? Have you had their food, especially outside of the Chicago area? I'd love to hear about it by hitting reply!

Disclaimer: This is not investment advice, just one person's opinion that may be incorrect. Do your own research before making any investment decisions.

😁THANK YOU to all who responded to the last newsletter!!

Check out the portfolio on Blossom, the podcast, or see what’s cooking on YouTube.

And now, here is this week's portfolio activity...

Dividends Received This Week ~$125.86

McDonald's (MCD) | $17.70
Agree Realty (ADC) | $43.01
Realty Income (O) | $26.90
Main Street Capital (MAIN) | $38.25

Dividends Received Year to Date (Schwab Only)~

$3,873.39

Stocks Bought (AVERAGE)

22 Agree Realty (ADC) | $71.98
30 Ares Capital (ARCC) | $21.26
100 Portillo's (PTLO) | $6.15

Stocks Sold (AVERAGE)

25 Realty Income (O) | $60.25
6 iShares 0-3 Month Treasury Bills (SGOV) | $100.53

Notable Ex-Dividends This Week + SSD Score

9/22 Meta Platforms (META), 0.27% | 70S
9/22 Broadcom (AVGO), 0.68% | 67S
9/23 Restaurant Brands International (QSR), 3.89% | 45BS
9/26 Canadian Pacific Kansas City Ltd. (CP), 0.87% | 76S
9/26 Danaher (DHR), 0.66% | 73S
9/26 Medtronic (MDT), 2.99% | 99VS
9/26 Keurig Dr. Pepper (KDP), 3.39% | 60BS

🎙️Podcast of the week🎙️

TIP754: Rule Breaker Investi...

Sep 19 · We Study Billionaires -...

96:53

This was one of the better interviews I've heard in a while and it was with Motley Fool co-founder David Gardner. He's making the podcast rounds on his NEW BOOK tour, and he pretty much invests the exact opposite of Warren Buffett... and with great success!

🎦If you missed it, my financial pain can be your gain! Sharing how a gain of $55 cost over $21,000.

🚨Seeking Alpha Special Offer!!🚨

Click the image above, sign up for a 7-day free trial, get $30 off an annual PREMIUM SeekingAlpha.com subscription + the next Alpha Pick FREE!

*This is an affiliate offer, and I will receive a small commission at no additional cost when you buy a premium annual subscription after clicking the image above.

Introductory offer for first-time subscribers only. $30 off Premium for the first year. At the end of the free trial (or immediately if you are no longer eligible for a free trial), $269 is charged automatically for the first year of your annual subscription. Auto-renews at the then-current annual list price (current list price is $299).
You will receive the May 15th strong buy pick from Alpha Picks. The pick will be sent via email to your email address associated with your Seeking Alpha account.

🎶Random music from the Dapper Dividends Jukebox🎶

Sir Psycho and his Monsters - Ballad