Giverny Capital's Podium of Errors - Buffalo Wild Wings

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Mar 25, 2014

You are likely surprised to find Buffalo Wild Wings in this section about errors as we have quadrupled our money since becoming shareholders. Difficult to ask for more? Well, it could have been better.

In the middle of 2012, the company had a disappointed quarter due to a substantial increase in the price of chicken wings that weakened gross margins. True to its typical myopia, Wall Street punished the stock which dropped by 24% thereafter.

We had a 2% weight on this stock in our portfolio at that moment. We thought about doubling our holding, believing that these margin problems would be temporary. I decided to go to Minneapolis to meet the executive team at BWW to look into this. I was (yet again) highly impressed by their vision and game plan for the company. I came back convinced that we should not only keep our shares but that we should add to our position. But I didn’t act on this conviction and when the stock started to climb, I waited on the sidelines. The stock doubled over the next 15 months. If we had had twice the weight in our portfolio, we would have been even more rewarded this year.

Source: Giverny Capital Annual Letter 2013