Opie
Opie, our Basset Hound pictured above, is the latest in a series of rescue dogs that my wife and I have adopted over the years. Rescue dogs typically have been named by the rescue group caring for them, but my wife and I have always, until Opie, renamed ours (some of the rescues have had what I call "stripper names," like Crystal or Sugar, and we had names already picked out, anyway). Opie was a name we kept, because what could be more perfect than Opie Taylor, who was the son of Sheriff Andy Taylor on The Andy Griffith Show. Our Opie even has reddish-brown coloring and freckles. I have even thought that we could have a whole menagerie of pets named after characters on the show--Barney, Aunt Bee, Floyd the Barber, etc. I even have human friends who have been auditioning for years to be Otis, the town drunk.
As was widely reported, pet adoptions surged during the COVID pandemic, sometimes to the extent of emptying the animal shelters of all of their guests. This made prefect sense, because if you are locked down at home, some canine companionship could at least ease the isolation. I also found that Opie made for a pretty handsome Zoom backdrop. Owning a pet involves some expenses, of course, and while you don't have to buy a Louis Vuitton dog bed, you are probably not going to cheap out on your pet's healthcare. Spending more and more at the veterinarian is a trend that has been in place since long before the pandemic, as people increasingly view their pets more as members of the family. Some investment analysts have even coined a term here as an investment theme: "the humanization of pets." Opie's latest battery of annual vaccines cost us about $400, and that is on top of the $200+ for his anti-anxiety medication. There are pet healthcare options now that didn't even exist when I was a kid going with my dad to take Rover (yes, I named her when I was four years old) to the vet.
Just as Opie can engage his ultra-sensitive Basset nose to track a chipmunk in our backyard, smart investors have a nose for following the money. There is money being spent here, and the scent leads to a company called IDEXX Laboratories (IDXX, $555). IDXX develops, manufactures, and distributes products, including diagnostic products, and services for the veterinary and livestock sectors. This is not what I call a "consumer facing" company, meaning that you and I don't buy their products and services directly. But, if your pet has been to the veterinarian, there is a good chance that products from IDXX (or one of its competitors) have been involved in any diagnosis and treatment. More money spent on pets means more potential for business for the company. IDXX has a market cap of about $45 billion; the shares have had a 21.76% annualized five-year return, compared with 12.50 % for the S&P 500. This is what I like to see: a company in the sweet spot of an emerging and enduring trend.
My wife and I love our veterinarian, Dr. Thomas Slattery at Walnut Grove Animal Clinic here in Memphis. We have been taking our pets there for years, and we are committed to supporting locally-owned businesses whenever we can. Now, you might assume, reasonably so, that your animal clinic is owned by one or more of the vets at the practice--but wait...it might not be. There has been a trend lately of Private Equity (PE) firms buying up veterinary practices (along with nursing homes, motor home parks, and other businesses). Is this necessarily a bad thing? Some people think it warrants at least a raised eyebrow. Here is an article from The Nation, a decidedly left-leaning magazine that rarely has anything positive to say about capitalism and free markets:
Yes, Private Equity firms are in it for the money. But guess what? Your veterinarian is partly in it for the money, as well, because everyone has to make a living. Don't expect The Nation to celebrate the virtues of the profit motive, but no profit means no animal clinic. My own experience is that the most important part of this equation is the individual veterinarian, her expertise and palpable concern for animals. You wouldn't expect someone who hated dogs to go into the field. But private equity involvement here does cause me some concern. I like to go into a business and be able to shake hands with the owner. If the ultimate boss is the Private Equity firm, then the owner is likely not even a veterinarian, and is removed from the day-to-day operations. Having corporate overlords whose chief focus is efficiency raises the specter of unfavorable outcomes--and the fear that things may start "going to the dogs," so to speak. My advice? If you love your vet and are satisfied with the quality of care she is providing, then by all means stick with her. She is the one who truly matters.
Speaking of local businesses, we shop at Hollywood Feed for our dog food, dog beds, toys and other pet paraphernalia. And one business that is not threatened by Amazon is dog grooming. Wendy Isham owns and operates Star Barks Mobile Pet Spa, and she comes to us in a gigantic bus that is outfitted inside for bathing and grooming the dogs. The dogs even get a bandana after each session. Wendy provides exceptional service, and it is the ultimate convenience for us.
Take are of your pets, but always be aware of who is behind the curtain.
Sweet Dreams, Opie
Life is short. Get busy.
Jim
Copyright 2024 James Brinkley Taylor, Jr.
Disclaimer/Disclosure: My family members and/or I own shares of IDXX. Individual stocks are mentioned here for the sole purpose of illustrating investment concepts, and nothing stated here should be construed as the advice to buy or sell any security.
Email me with any questions, comments, or feedback:
jbrinkleytaylor@gmail.com
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