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And to bolster returns, they piled on leverage.
The value investor is wary of taking on leverage.
And when volatility is low, investors tend to borrow more, so they take on leverage.
"What we've told our investors is that we do not intend to take on leverage of north of four times our equity, Mr. Barlow said.
The long-term gains from activism held even when the hedge funds advocated taking on leverage or other "quick buck" strategies.
Although they took on leverage, they have raised equity to reduce that.
Given PZZA's ability to take on leverage and generate meaningful free cash flow, private equity may also be interested.
That would be painful for some businesses, but not as painful as a crash that could result if leverage keeps getting piled on leverage.
This leverage on leverage infuriated Hank Paulson and one of the reasons he and his team let Lehman fail.
"Banks should live on leverage of six or eight to one," Patten remarks, not the more typical 30-to-one of recent years.
His rehabilitation proves one thing: You can make a nice pile of money by buying on leverage in a rising market.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com