Thinking outside the box — it’s a horrible cliché, I’ll grant you, but it’s exactly what’s required for investors, professional and otherwise, to achieve alpha from their investment portfolios.

Alpha, for those unfamiliar, is simply the excess return produced by a basket of stocks on a risk-adjusted basis versus an appropriate benchmark.

I bring this up because 19 months ago I created a basket of 10 stocks associated (in one way or another) with Bill Stiritz, CEO of Post Holdings (POST). Stiritz, it turns out, has more than a few admirers, including Charlie Munger.

When it comes to creating long-term shareholder value, there are few CEOs with as much talent for turning pennies into dollars and millions into billions. The Purina Portfolio exemplifies the “Bill Stiritz Way.”

A year ago, I revisited the 10 stocks to see how they’d performed in the first seven months since creation, and now two years later, it’s time revisit the Purina Portfolio again to see whether thinking outside the box really does pay dividends:

It’s safe to say the biggest disappointment of the Purina Portfolio was Bill Stiritz himself. POST has lost 2% of its value over the past 19 months, greatly underperforming the market and making it by far the worst of the 10 stocks.

So, what happened at POST?

Investors haven’t bought into Stiritz’s acquisition binge. Since POST was spun off in February 2012, its total long-term debt has rocketed from $939 million (March 31, 2012) to $3.8 billion (end of June) — a four-fold increase that has investors wondering if the cagey veteran has gone too far.

As SunTrust Banks analyst William Chappell, Jr., put it after delivering a third-quarter loss:

“The major investor concern, that Post’s acquisition pace was too rapid exposing it to execution risk, was further realized in the results.”

Stiritz can’t be too worried about these losses because on Oct. 10, he announced that CFO Bob Vitale was taking over as CEO on Nov. 1; he was moving upstairs into the newly created role of executive chairman. At 80, Stiritz appears comfortable handing over the day-to-day to Vitale, who is only 48.

In other news concerning its restructuring, COO Terrence Block (age 65) is retiring. James Holbrook and James Dwyer will oversee its two biggest divisions — Consumer Brands (Cereals, PowerBar, etc.) and Michael Foods — while its private-label business will report directly to Vitale.

The best example of a company that has followed a similar path is Jarden (JAH), the consumer products conglomerate founded by Martin Franklin and Ian Ashken. Over the past decade, it has acquired some very strong brand names such as Yankee Candle, Rawlings, K2, Berkley, etc. In this time frame. JAH stock has achieved an annualized total return of 14.1% — almost 7 percentage points greater than the S&P 500.

Believe me when I say this: Stiritz is pulling a Franklin.

The Best Performer

Easily the best stock in the Purina Portfolio over the past 19 months is Jack in the Box (JACK), up 112%. Its legacy brand has been executing at an extremely high level in 2014. According to The NPD Group’s Sales Track Weekly, JACK’s same-store sales growth for the third quarter ended July 6 was 2.4%, or 240 basis points higher than the other 15 quick-service sandwich and burger chains included in the survey.

Qdoba Mexican Grill, its fast-casual chain, is in the middle of a turnaround. So far it appears things are going well. In Q3, same-store sales grew 7.5% system-wide, its second consecutive increase of 7% or more. KeyBanc analyst Christopher O’Cull stated in a note to clients, “We reiterate our BUY rating on JACK and increase our PT from $68 to $80 following recent meetings with the Qdoba management team as we came away increasingly confident in the Qdoba turnaround plan and outlook.” Furthermore, Cull feels JACK could sell a small minority stake in Qdoba through an IPO to unlock some value in its stock.

In 2014, the company expects its operating earnings per share to grow a minimum 31% to $2.38. With Qdoba becoming a more meaningful piece of the Jack in the Box pie, JACK’s valuation is only going to continue to grow as we move into 2015.

It wouldn’t surprise me at all if JACK is still the best performing stock in the Purina Portfolio come 2016.

Bottom Line

I’m a big believer in Bill Stiritz.

The only question mark at Post Holdings is whether interest rates remain low long enough for it to whittle down its debt. If they’re low for say, another two to three years, I don’t see any problems managing its debt. Should POST stock kick it into gear, which I believe it will, the Purina Portfolio could be humming nicely come this time next year.

Six out of 10 stocks in the Purina Portfolio are consumer staples stocks. For my money, this makes it more like the iShares U.S. Consumer Goods ETF (IYK) and less like the SPDR S&P 500 ETF (SPY). Over the past 19 months, the Purina Portfolio has outperformed the IYK by 523 basis points. With a POST contribution to the portfolio in the coming months, I expect the outperformance to continue.

You might not like all of the stocks held in the Purina Portfolio or the rationale behind its construction (Bill Stiritz-related companies deliver shareholder value) but I believe it successfully demonstrates that outside-of-the-box thinking can actually work when it comes to active investment management.

As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.