Dueling Fools: The Knot Bull Rebuttal

"If you're looking to entrust your money -- and to some extent, your financial future -- to a company, wouldn't you want one that has a history of treating its owners well?"

-- Chuck Saletta, five minutes ago

Chuck's right. You should want to own companies that treat their shareholders like owners. Fortunately for me (and you), that's The Knot (Nasdaq: KNOT  ) . Here's why.

First, CEO David Liu and his management team are committed owners. According to the most recent proxy statement, The Knot's directors and executive officers, as a group, owned 6.7% of the outstanding shares as of April 2.

Second, The Knot's compensation policies are as shareholder-friendly as I've seen. Quoting from the proxy:

In 2006, the bonus opportunities were based 100% on The Knot's financial performance weighted equally between revenue and net income goals ... In 2006, a non-cash tax benefit of $9.4 million, resulting from the reversal of a portion of a valuation allowance against The Knot's net deferred tax assets, was excluded from net income in determining the bonus opportunity. In addition, we acquired WeddingChannel on September 8, 2006. The results of operations for WeddingChannel, which were included in our consolidated results of operations since the acquisition date, were also excluded from the bonus calculations. [Emphasis mine.]

Notice that management had the opportunity to boost its take from the corporate kitty but didn't do it, because doing so wouldn't serve shareholders.

No doubt, Chuck, dilution stinks. But there's dilution from specious stock-option grants, for which Inside Value recommendation Intel (Nasdaq: INTC  ) is famous, and then there's dilution intended to spur growth.

WeddingChannel may not yet be delivering the growth investors want, but we're not even past year one. How about a little patience, Fool?

Remember, this is a $72 billion market that renews its vows every year. And more business is moving online daily. In 2006, for example, an estimated 77% of couples used the Web to plan their nuptials, according to The Wedding Report.

How unsurprising. Brides (and grooms) will always need help preparing for the big day. They'll want tools and advice from those who've already been down the aisle. The Knot has that and a lot more. And its stock is trading at a level that seems likely to attract deep-pocketed suitors.

In investing, that's a match made for your portfolio.

Wait! You're not done with this Duel. Go back and read the other arguments, then vote for a winner.

The Knot is a Motley Fool Rule Breakers pick. Six of the stocks in the portfolio have at least doubled. Want to find out what they are? Click here to test-drive Rule Breakers for 30 days. There's no obligation to subscribe.

Intel is an Inside Value pick.

Fool contributor Tim Beyers, who is ranked 6,440 out of more than 29,000 in CAPS, is a sucker for growth stocks and a regular contributor to Rule Breakers. Tim didn't own shares in any of the companies mentioned in this article at the time of publication. Tim's portfolio holdings can be found at his Fool profile. His thoughts on growth stocks, Foolishness, and investing in general may be found in his blog. The Motley Fool's disclosure policy tied the knot with the Fool's trading guidelines almost 15 years ago. The happy couple still enjoy time with their nine investing newsletters.


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