A very funny thing happened last week. I was minding my own business when a package arrived containing, of all things, chocolate. To say this was a surprise is to put it quite mildly.
Let's set the scene. A few weeks back, I noted that Rocky Mountain Chocolate Factory (NASDAQ:RMCF), a small confectionery company based in Durango, Colo., had split its stock 3-for-2. So, what was once a single unit priced at $13 was now sliced into smaller pieces, and trading at about $9. As I said at the time, this does exactly nothing to increase shareholder value -- it's just taking the same company and slicing it into smaller pieces.
Management's reaction to my piece was interesting. The Durango Heraldran a story quoting Rocky Mountain CEO Bryan Merryman as saying, "What (Mann) says in that article is absolutely incorrect." He noted that the company has "a cash dividend, our earnings are growing, and we've outperformed the Nasdaq to the tune of about 500% over the last five years."
All of this is well and good, but the problem is that I made no judgment whatsoever about the company -- I was talking about the stock split and Rocky Mountain's silly justification thereof. It's as if I noted that they had mismatched socks and they shot back with, "Don't you talk about my mama." I'm just not so sure how I can be "absolutely incorrect" about a bunch of stuff that I never mentioned, but really, in those areas the company doesn't get much complaint from me. It made me think that perhaps they were protesting a bit too much.
Then the package arrived -- two pounds of Rocky Mountain Chocolate Factory chocolate. With the package was a note: "I couldn't afford a 2 lb. box, so I sent two 1 lb. boxes instead."
Stock-split humor. Classic.
Having determined that I had not actually been sent a chocolate-covered horse head, I set about conducting an informal taste test of Rocky Mountains' wares. Word around the Fool on a scale of one to yummy was nearly uniformly "yummy."
You see, Mr. Merryman -- this was my point. You have a product. Your product is good. If you focus more on marketing and selling your product and less on marketing and selling your stock, it is bound to pay off. I note that the company's trading volume in number of shares and dollar amounts have dropped substantially since the split. I know you want to attract investors. It's really not very complicated: Build a better chocolate company, and they will come.
Now, if you'll excuse me, I have to go write critical articles about General Dynamics (NYSE:GD) and Tiffany & Co. (NYSE:TIF). I could really use a new Gulfstream and some bling. Or a cruise missile. Yeah, that would be cool....
Bill Mann owns none of the companies mentioned in this story. Rocky Mountain's $0.24 dividend really is a pretty great thing for such a small company. For other dividend payers, consider a subscription to Mathew Emmert's Income Investor .
