Most people know that the Oprah Winfrey Show, often referred to simply as Oprah, is one of the longest-running and most successful daytime television talk shows in history. What is not as well-known, is that the show’s namesake, has gone on to orchestrate a major listed company turnaround, and in the process add an estimated $500 million to her already sizeable net worth.
Whilst media attention has for years focussed on the negative aspects of Oprah’s public struggle with her weight, she decided to use this free publicity to her advantage by buying an 8% stake in Weight Watchers.
By taking a board seat, sharing her weight loss story and secrets to success on the Weight Watchers website, she has managed to rejuvenate interest in the struggling weight loss company’s programs and products. Her direct involvement, brand and endorsement has seen the company’s share price increase from $7 in 2015 (her estimated average purchase price) to over $100 – an increase of over 1300% in less than three years!
Whilst, these types of returns do not occur often, they do show what prudent contrarian investing can achieve. In order to achieve returns in excess of what the market is able to deliver, our managers invest in temporarily out of favour companies, with the potential to generate long-term outperformance. As the market’s perception of these out of favour companies become positive over time through a catalyst, the share price starts to track the company’s underlying value, at which point our managers exit, locking in the price appreciation.