1,347% Gain In 4 Years: The Ultimate Lesson in Successful Investing from One Bold Bet

How a Bold 1,347% Bet Redefined the Art of Successful Investing

Most people thought Dillard’s was dead.

In 2020, it looked like a fossil from a bygone retail era. Malls were dying, Amazon was eating everyone’s lunch, and the pandemic was the final nail in the coffin for department stores.

But here’s the kicker: Dillard’s isn’t just alive. It’s thriving.

Its stock price? A jaw-dropping $434. A few years ago, you could’ve snagged it for $30.

This isn’t luck. It’s strategy. And one man—Ted Weschler, one of Warren Buffett’s top lieutenants—saw it all coming. While everyone else was predicting bankruptcy, he was scooping up shares like they were Black Friday deals.

How did this happen? Let’s break it down.

Weschler’s Bet: Finding Gold in the Rubble

Imagine being Ted Weschler in 2020.

The world’s falling apart. Retail stocks are tanking, and Dillard’s is being booted from the S&P MidCap 400 because it’s “no longer representative of mid-cap companies.” Translation: Everyone thinks it’s toast.

But Ted doesn’t follow the herd. He looks deeper.

What he sees is a company trading for pennies on the dollar—about $30 a share. He buys over a million shares, investing $30 million of his own money. By 2021, that $30 million had exploded into $300 million. Today? It’s worth over $434 million.

This wasn’t some reckless gamble. Weschler isn’t the guy you find at the casino betting it all on red. He’s methodical, analytical, and maybe just a bit daring when the numbers back him up.

Why Dillard’s? Ted’s Playbook

Here’s why Weschler went all in on a company most investors wouldn’t touch with a ten-foot pole:

1. A Balance Sheet That Doesn’t Lie

While other retailers were drowning in debt, Dillard’s had its act together.

• A manageable debt-to-capital ratio of about 30%.

• A cash flow that was still positive—even in the worst of times.

When you’re investing in a struggling company, the first question to ask is: Can this thing survive? For Dillard’s, the answer was a resounding yes.

2. Real Estate = Hidden Treasure

Dillard’s owns a ton of its store locations. That’s not just retail space—it’s an asset. While competitors were choking on lease payments, Dillard’s could sit tight. Real estate isn’t sexy, but it’s reliable.

3. Dirt-Cheap Valuation

When Weschler bought in, Dillard’s was trading at 0.34x its revenue. To put that in perspective, most companies are considered cheap at 1x revenue. At that price, Ted wasn’t just buying a stock; he was practically buying the company’s entire inventory and store fixtures for free.

The Secret Sauce: How Dillard’s Turned It Around

So how did Dillard’s go from “doomed” to “dominating”?

1. Inventory Mastery: The Quiet Game-Changer

Inventory management might sound boring, but it’s the lifeblood of retail. Poor inventory control sinks companies faster than bad customer service or weak marketing. Dillard’s management understood this and made it their mission to get inventory right, especially during the turbulent pandemic years.

Lean Inventory, Better Margins

When competitors were drowning in unsold stock and offering steep discounts to clear it, Dillard’s kept its inventory lean. Instead of chasing sales through aggressive markdowns, the company focused on preserving margins. This disciplined approach not only stabilized cash flow but also ensured they were ready to meet post-pandemic demand without being saddled with obsolete inventory.

The Power of Real-Time Adjustments

Dillard’s employed a flexible inventory strategy that allowed it to adapt quickly to changing consumer demands. This nimbleness helped them maintain relevance when customer preferences shifted almost overnight.

2. Real Estate: A Hidden Fortress

One of Dillard’s most underappreciated assets is its real estate portfolio. Unlike many of its peers, Dillard’s owns a significant portion of its stores, which has been a game-changer for its financial stability and strategic flexibility.

No Rent? No Problem

Owning their locations meant Dillard’s wasn’t burdened by lease obligations that drained cash flow during the pandemic. Retailers like JCPenney and Macy’s struggled to renegotiate leases and keep creditors at bay, while Dillard’s avoided these headaches entirely.

Monetization Options

Real estate ownership also provides a safety net. If things had gotten worse, Dillard’s could have sold or leased properties to generate cash. This optionality added an extra layer of financial security, giving the company a unique advantage over competitors that lease their spaces.

3. Share Buybacks: The Silent Value Booster

Dillard’s has been aggressively buying back its own stock for years, but the strategy went into overdrive during the pandemic. This move has played a massive role in boosting the company’s stock price and delivering value to shareholders.

Reducing the Float, Increasing EPS

By reducing the number of shares outstanding, Dillard’s effectively increased earnings per share (EPS) and concentrated ownership among existing shareholders. This scarcity effect—fewer shares available for trading—helped push the stock price higher as demand for the company’s shares grew.

A Sign of Confidence

Buybacks also signal confidence. Management’s willingness to reinvest in its own company is a message to investors: “We believe in our long-term value.” For Dillard’s, this wasn’t just a message—it was a winning move that aligned shareholder interests with management’s vision.

4. Operational Efficiency: Less is More

Retail is a cutthroat business, where efficiency can mean the difference between survival and extinction. Dillard’s has consistently demonstrated its ability to do more with less, keeping costs under control while still delivering a high-quality customer experience.

Controlling Costs Without Sacrificing Quality

While some retailers resorted to cutting corners, Dillard’s focused on smart cost reductions. For example, they optimized store operations by streamlining staffing levels and reallocating resources to high-performing locations.

Fewer Stores, Better Performance

Dillard’s hasn’t chased growth for growth’s sake. Instead of opening new stores indiscriminately, the company focused on maximizing the profitability of its existing locations. This “less is more” approach allowed them to concentrate on their core markets and avoid overextending their footprint.

5. Post-Pandemic Positioning: Ready for the Boom

As the world began to reopen, consumers were eager to shop in person again. Dillard’s was perfectly positioned to capitalize on this pent-up demand.

Capitalizing on Regional Loyalty

Dillard’s has a strong presence in the South and Midwest, where customer loyalty runs deep. These regions also saw earlier and more robust economic reopenings, giving Dillard’s an edge over competitors concentrated in coastal urban centers.

6. Customer Experience: Loyalty Beyond Transactions

In an era where online giants dominate with convenience and price, Dillard’s has doubled down on the in-store experience. The company recognizes that its customers value more than just the products—they value the experience of shopping.

High-Touch Service

Dillard’s has consistently delivered high-touch customer service, creating an environment that keeps shoppers coming back. This focus on personalized interactions has been a differentiator, especially in the era of impersonal online retail.

Store Atmosphere

From clean, well-organized displays to a curated product mix, Dillard’s stores exude an air of quality that resonates with its target demographic. This attention to detail has helped the company maintain a competitive edge, even as many brick-and-mortar retailers struggle.

7. E-Commerce: A Work in Progress

Let’s not sugarcoat it: Dillard’s isn’t Amazon. Its e-commerce operation has room for improvement, but the company has made strides in adapting to the digital era.

Focused Online Presence

Instead of trying to compete directly with retail giants, Dillard’s has focused on serving its loyal customer base online. By offering a seamless shopping experience that complements its in-store operations, the company has created an omnichannel approach that works.

Future Potential

While e-commerce isn’t yet a dominant part of Dillard’s revenue, it represents a significant growth opportunity. Continued investment in digital infrastructure and targeted online marketing could unlock new revenue streams and future-proof the business.

8. Leadership: A Steady Hand in Stormy Seas

A company is only as good as its leadership, and Dillard’s has benefited from steady, competent management.

Family Leadership

The Dillard family has maintained a significant role in the company’s operations and decision-making. This long-term focus has allowed the company to prioritize sustainable growth over short-term gains.

Pragmatic Decision-Making

Dillard’s management has consistently made pragmatic, data-driven decisions. From inventory adjustments to capital allocation, their focus on execution has been key to the company’s turnaround.

9. Strategic Risks That Paid Off

Every strategy involves risk, and Dillard’s has taken calculated bets that have largely paid off.

Contrarian Thinking

When most retailers were cutting back and hoarding cash during the pandemic, Dillard’s leaned into its strengths. This contrarian approach, combined with a clear understanding of its balance sheet and market positioning, set the company apart.

Timing is Everything

The timing of Dillard’s strategic moves—especially its share buybacks—was impeccable. By acting decisively during a period of market pessimism, the company created a foundation for long-term success.

Asymmetry: Why Ted’s Bet Was a Masterclass

This investment wasn’t just about buying low and selling high. It was about understanding asymmetry—a fancy way of saying, “What’s my risk if I’m wrong, and what’s my reward if I’m right?”

Limited Downside

Sure, retail was struggling, but Dillard’s wasn’t a dumpster fire. It had real assets (its real estate), a reasonable amount of debt, and operational cash flow. Even in a worst-case scenario, the company wasn’t going under.

Massive Upside

On the flip side, if the retail market rebounded (which it did), Dillard’s was perfectly positioned to capitalize. And boy, did it capitalize. Revenue shot up 59%, and operating income hit over $1 billion.

Lessons from Dillard’s

This isn’t just a story about a stock. It’s a blueprint for smart investing. Here are the big takeaways:

1. Think Like a Contrarian

When everyone’s running for the exits, sometimes it pays to walk in. Weschler saw value, whereas others saw risk.

2. Understand the Fundamentals

Don’t just buy a stock because it’s cheap. Ask why it’s cheap. For Dillard’s, the low price didn’t reflect its real estate holdings, its operational strength, or its ability to weather the storm.

3. Patience is Profitable

Ted didn’t make this money overnight. He bought in, held on, and let the story play out. Most investors don’t have the stomach for that kind of patience.

What’s Next for Dillard’s?

Now that Dillard’s is flying high, the big question is: Can it stay there?

Opportunities

• Digital Growth: If Dillard’s can step up its e-commerce game, it could tap into a whole new market.

• Loyalty Programs: Building stronger relationships with customers could drive repeat business.

Challenges

• Competition: Amazon isn’t going anywhere, and neither are competitors like Macy’s.

• Economic Uncertainty: Inflation and recession fears could slow consumer spending.

Final Thought: Dillard’s Isn’t Just a Stock—It’s a Lesson

Dillard’s rise from $30 to $434 isn’t just a stock market fairy tale. It’s proof that with the right mindset, the right research, and the right amount of patience, you can win big—even in the unlikeliest places.

Weschler’s story isn’t just about making money; it’s about seeing what others miss. And isn’t that what great investing is all about?

So here’s the question: What’s your “Dillard’s”? What opportunity is sitting right in front of you that everyone else is ignoring?

Find it. Then do what Ted did. Bet big, be patient, and let time do the heavy lifting.

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