The company was young and ambitious.

That was fine, because so was I.

The year was 1990, and I was trying to make a name for myself as a commercial real estate developer.

My first client was a company called Advance Auto Parts (AAP). As the name suggests, they’re an auto parts retailer. At the time, the firm was privately held and based out of Roanoke, Virginia. There were around 100 stores back then.

But the company had big plans to expand their footprint and grow rapidly. But in order to do that, they would need partners. And through a connection, I had managed to arrange a meeting.

I still remember walking into my first meeting with the Advance Auto executives. My pitch was straightforward. As a former real estate agent, I was intimately familiar with the Carolinas, an area the company was eyeing for growth. I also understood the state and local regulations of the area, an important thing for any new real estate project.

I told them I believed I could grow their footprint rapidly in just a few years, that Advance Auto could become a staple in that part of the country. But to start, I asked them to just give me a shot on one location. If I could pull that off, perhaps we could talk.

To this day, I’m not sure what convinced them to take a shot on a young guy like me (I was 27 at the time). Maybe, as a young firm, they had trouble getting the attention of more established developers, the kind that usually only went after whales like Wal-Mart. Maybe they saw how motivated I was to prove myself, and that I would do just about anything to make the relationship work.

Either way, Advance Auto gave me the greenlight. It would prove to be a seminal moment for my career… and (in my humble opinion) for the company.

My first Advance Auto store was in Laurens, South Carolina. And as promised, I worked around the clock for them… on the paperwork, the construction, the zoning – everything. And after more than a few sleepless nights, it was done. I’d built my first Advance Auto Parts.

The company must have liked the work. Because they contracted with me to build more locations. And so, I did.

Over the next four years, I developed around 40 stores across North and South Carolina, Georgia, and Alabama. Remember, there were around 100 stores when I first got involved. So, this wasn’t marginal growth.

And, in my own small way, I helped the company build a foundation for its initial public offering, which took place in 2001.

That little company I knew more than 30 years ago has changed a lot. The firm listed 4,935 locations across the United States and Canda as of December 2023.

The business has fallen on hard times recently (that’s a topic for another day). But, for decades, the stock was a great one to own. When the company held its IPO in 2001, shares traded for around $13. At its all-time high in 2022, AAP traded near $240. That represents growth of more than 1,700%.

Making that deal with Advance Auto all those years ago showed me the potential of asymmetric opportunities. I knew that dealing with a smaller firm meant more risk.

But the potential upside was growth… sometimes rapid growth.

And finally, for the first time ever, I’ll be recommending these types of investments to my readers.

Wide Moat’s Last Frontier

At Wide Moat Research, we have published analyses on nearly every type of asset or strategy: Blue-chip dividend payers, real estate investment trusts, business development companies, homebuilders, corporate bonds, put-selling strategies, and alternative assets, to name just a few…

But there’s one area of the market that we’ve mostly avoided. That would be small-capitalization companies.

That changes tomorrow…

For the first time ever, I’ll be publishing recommendations on my favorite small-capitalization companies, the kind with the potential for rapid growth. In many ways, covering small caps is a “last frontier” for Wide Moat Research.

And, yes, investing in small-capitalization companies comes with risks (because there are always risks).

As both a real estate developer and investor for over 30 years, I’ve learned that finding smaller companies to own is more an art than a science. Valuation tends to be more difficult given the shorter earnings (and dividend) history. Also, most of these small-cap businesses are too small for rating agencies, and there are just a few analysts covering them.

But if you’ve read me for any length of time, then you hopefully value the research we publish here. And you know I put an emphasis on sleep well at night ("SWAN") investing. That will continue to be our goal with this new endeavor. We’ll continue to look for companies with competitive advantages (wide moats), predictable and durable business models, and sustainable free cash flow.

It’s been a long time coming, but I couldn’t be more excited to announce that it’s time for Wide Moat Research to take this step. And I’d like you to join me.

If you’ve enjoyed the work here – or even if you’re just curious what my first small-cap recommendation will be – I’d encourage you to join me tomorrow morning. At the very least, I can guarantee the event will be informative and valuable.

You can learn more by going right here, and I hope to see you tomorrow.

Regards,

Brad Thomas
Editor, Wide Moat Daily

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What are you interested in hearing about through Wide Moat’s new step? Write us at [email protected].