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The Once (and Future?) Misfit: Balchem Corp (BCPC)
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The Once (and Future?) Misfit: Balchem Corp (BCPC)

A lesson in how a great business can fall from grace.

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Misfit Alpha
May 11, 2023
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The Once (and Future?) Misfit: Balchem Corp (BCPC)
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The Fallen Angel, Alexandre Cabanel, 1847, oil on canvas (Musée Fabre)

Sometimes one’s process is flawed.

A few days ago, in another universe, you probably would have been reading a profile of Balchem Corp. It has all the trappings of an unheralded wealth creator. Wall Street barely covers it. Its business is hard to understand. It is categorized as a specialty chemical manufacturer, a cyclical and commodity industry most investors avoid. And, perhaps most importantly, its returns were better than well-known great investments like Starbucks and Microsoft.

I had compiled a whole draft, profiling why it performed so well. All that was left was a short conclusion on why companies like this are prime examples of great investments hiding in plain sight.

Perhaps I would have powered through the conclusion and published it if I had been more caffeinated. (no joke, here’s the draft with a busted thesis, terrible spelling, and poor grammar on full display).  

Fortunately, the coffee had worn off. I stepped away and went for a run to collect my thoughts. There were nagging questions that I couldn’t shake. When I started pulling on a few threads, the concept unraveled. What was once a great example of a misfit wealth creator is now a run-of-the-mill business corrupted by poor management incentives.

So this is the second attempt at profiling Balchem Corp., why it originally fit the profile, why I got it wrong, and the importance of constantly challenging one’s ideas and processes.


Shoutout to Koyfin for their data and charts, without which much of the research for this piece wouldn’t be possible. Sign up for Koyfin here and receive 10% off.

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