Hey all. I hope everyone is having a lovely Friday. I apologize for not posting an article this morning. I had to visit the doctor for some back pains after back-to-back (no pun intended) 35 mile bike rides the last two afternoons. So, I was out of commission. What I want to post today is a preview of something that I would want to do every Friday, and I would love to get your feedback. The post is about long term positions more than just a couple weeks or a month. It is analysis of long term investments through balance sheets, financial statements, and cash flow statements. I posted this a couple months ago, but now that I am full time I would like to do one of these every Friday afternoon. Let me know what you think.
As for positions, our final open position of the week Aeropostale Inc. (ARO) has worked out to be a dandy. We were looking for 4-6% returns off of a 28.00 entry. I got out this morning after some stellar earnings from the company and a market bounce at 29.26 for a 4.5% return. It is amazing this one was resilient enough to work out through the whole week.
Long Term Investment: Big Lots Inc.
Profile: As of the beginning of 2009, the company operated 1,339 stores in 47 states. The company operates as the largest broadline closeout retailer in the USA. Big Lots offers products in the food, health and beauty, plastics, paper, chemical, pet supplies, home decorative, furniture, electronic, tools, home maintenance, seasonal, toys, infant accessories, and apparel lines. The company is headquartered in Columbus, Ohio.
Thesis
With the economic downturn and new management in 2005, Big Lots over the past several years has begun to gain some market share and carve out its own niche in the discount store market. The shopping center has seen an influx in its income and free cash flows, which has begun to attract investors to the company. The company has seen consistency in its revenues since Steven S. Fishman took over as CEO and President in 2005. The company has redefined its business, focusing on developing new markets – higher-income residents, increasing its brand name, and focusing on long term growth.
The company, though, does face rather rigorous competition from three sides. It loses market share from the smaller, dollar-store competition, seen in Family Dollar, Dollar Tree, and Dollar General. It…
