Course 508: Great Investors: Peter Lynch
Profitability, Price, and a Good Business Model
In this course
1 Introduction
2 Invest in What You Know
3 Seize a Good Opportunity
4 Profitability, Price, and a Good Business Model

Lynch generally looked for three qualities in a good company: profitability, price, and a good business model. At one time Lynch liked sleepy steelmaker Wheeling-Pittsburgh (a division of WHX Corp. WHX) because it was one of few steel mills still making money. He was also once a big fan of Federal National Mortgage Association (best known as Fannie Mae FNM), for its price/earnings ratio, which he felt was moderate for such a strong company. Finally, Lynch liked fast-food purveyor Au Bon Pain (a division of Panera Bread Co. PNRA) when it first hit the scene in the late 1980s, because it served "quality" fast food rather than "mediocre" fast food. Since stepping down from Magellan in 1990, Lynch has spent his time promoting Fidelity’s mutual funds and mentoring the company’s fund managers. Given the track record he set at Magellan, which had $13 billion in assets and an average total return of 25% per year when he retired, his investment opinions will continue to be well regarded no matter how many television ads he does.

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