No. of Recommendations: 2

Excellent work! Very interesting collection of information and lessons. I slightly take issue with our classification of Middleby. You seem to toss aside what's happened at the company as an a) HG pop, b) dividend payment, and c) reasonable earnings report. If that were all, then CNS would be a whopping winner too. I'd try to convince you here, briefly, that what has happened at Middleby is that growth rates accelerated. Just as folks were asking how a company growing the top line at 4% could trade at 15 times earnings, the growth zoomed to 7%, then to 10%, with earnings and cash flow accelerating faster. I don't happen to think that Middleby is priced beautifully for market-smashing returns from here. Certainly not. However, the combination of superior new management, a strong board, domination of a niche, and accelerating growth rates are what has taken this stock from $18 to $53. I don't think the HG pop had a thing to do with the intrinsic value. The special dividend was a nice show of strength (and a way to get owners some capital without having to sell shares), but I don't think it added much to the valuation either. I just think this was a classic case of turnaround then accelerating earnings growth, a la Gillam at McKinley Capital Management. As I said, though, it is not as attractively priced here. Though, as Daniel Hong has eloquently written, I don't think it's an absurd valuation here either.

Thanks for a great collection of information. Foolish best,

Tom Gardner
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