Author Topic: WINN - Winn-Dixie  (Read 10764 times)

Parsad

  • Administrator
  • Hero Member
  • *****
  • Posts: 8660
Re: WINN - Winn-Dixie
« Reply #10 on: May 12, 2011, 12:35:13 PM »
We've been selling today.  We bought in at $6.20 a little while ago.  In the right hands, this could be something, but I'm not sure somebody will step in.  I'll take a nice pop when I can get it.  Cheers!
No man is a failure who has friends!


beerbaron

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1404
Re: WINN - Winn-Dixie
« Reply #11 on: May 12, 2011, 04:00:56 PM »
I haven't been selling yet as I have an intrinsic value between 10$ to 14$ in a 18-24 month range.

There was no new material information on this company but about 1 week ago they participated in an investor conference and gave a presentation. This seemed like a trigger point as the stock began to move the next day. Nothing specific was said tough...

Great minds think alike Parsad, I've bough mine at 6.24$ 6 months ago. You'reprobably smarter tough because you've taken your chips off the table!

BeerBaron

Parsad

  • Administrator
  • Hero Member
  • *****
  • Posts: 8660
Re: WINN - Winn-Dixie
« Reply #12 on: May 12, 2011, 05:01:17 PM »
Well, we generally sell early unfortunately.  I'm sure you will walk away with more by being more patient, but we average in and we average out.  In WINN's case, we started buying when it was down already, and it never went down much further. 

I think if it was run well, it should trade around $10-11...near book.  I'm concerned about management, thus we aren't quite as patient.  It was just dirt cheap and had great cash flows, so we bought when it had been beaten up badly.  All the company needs is to spend less on renovations and capital expenditures, and put the rest back into share buybacks or a dividend.  At least until the stock is near book, and then they should just redistribute whatever capital is in excess of normal operating expenditures. 

Unfortunately, you've got a CEO who thinks he can turn it into the next Albertson's in their heyday, but the market is very different and there is much more competition these days at various pricepoints and in various forms.  Their competition isn't just Safeway, Publix, Kroger and Walmart, but Target, Kmart, Whole Foods, you name it. 

They have a niche, they should protect it with quality service, low prices and focus on the customer experience, while running it as lean as possible.  The business will die over time, and all they can really do is keep it afloat as long as possible, and distribute cash out to shareholders through buybacks or dividends.  But they can prolong that timeframe by doing the little things right.  Blowing wads of cash into more renovations is just a losing proposition, as the return on capital won't be adequate.  Same thing Sears should have done right from the get go.  Eddie should have sold alot of the retail space when prices were good and redeployed those assets.  Instead, he held on to them and the commercial market turned, while the underperforming stores continued killing the well-performing stores.  Cheers!
No man is a failure who has friends!

claphands22

  • Lifetime Member
  • Sr. Member
  • *****
  • Posts: 370
Re: WINN - Winn-Dixie
« Reply #13 on: May 12, 2011, 08:51:46 PM »
The investor conference, that makes sense.

Parsad, we share similar thoughts on WINN's management..too much emphasis on turning around the company, and not enough emphasis on returning capital to the shareholders.

Since both of you follow this company...I'd like to share some of my anger for Peter making it seem Dan Portnoy was leaving because of family reasons, as if he had quit on his own...THEN, they give him a hefty severance package (http://www.sec.gov/Archives/edgar/data/107681/000119312511053307/dex101.htm) as if he was fired.

Now, what this says to me is, Peter isn't being very straight forward with what's really going on with this company. He is polishing some turds.

Did any of you guys catch this or am I making a sloppy conclusions?
« Last Edit: May 12, 2011, 09:48:29 PM by claphands22 »

Parsad

  • Administrator
  • Hero Member
  • *****
  • Posts: 8660
Re: WINN - Winn-Dixie
« Reply #14 on: May 12, 2011, 10:52:52 PM »
I'm not sure exactly what transpired there, but these guys have no idea what equitable compensation is.  It's the main reason I never touched the stock when it fell below book.  It had to fall to 60% of book for me to say, ok now I can consider this business because there are idiots in charge and I need a really significant margin of safety. 

How can you screw up a company that generates so much free cash, has no debt and you've just finished renovating 75% of the stores...and you've still got a ton of cash on hand?  Well, you can go and continue to renovate, even through the incremental benefit from remodelling those stores will be far less than the capital expense.  Thank God they came to their temporary senses in the last six months, and decided to slow down the remaining remodelling. 

This is a simple business in a cut-throat industry, but they have huge advantages over their competitors since coming out of bankruptcy with a clean balance sheet.  This was not the way this business should have gone.  Hopefully, somebody can ram some sense into management, or step in and takeover, but I'm not betting on it...thus the profit-taking as it goes up.  Cheers!     
No man is a failure who has friends!

claphands22

  • Lifetime Member
  • Sr. Member
  • *****
  • Posts: 370
Re: WINN - Winn-Dixie
« Reply #15 on: May 12, 2011, 11:39:12 PM »
I don't think they slowed down capex temporarily because they came to their senses, they said they slowed  capex down in order to get permits for the renovations. Yet, they clearly aren't trying to grow their empire at any costs w/ their 30 something store closures last year.

But yeah, I agree, I wish they weren't investing so much in the stores. George Schultze has been pounding the table about their capital spending & not returning money to the shareholders (http://www.jaxdailyrecord.com/showstory.php?Story_id=532287)

Anyhow, I am still holding on to my position at this price. I agree with Beerbaron, IV is around 12 and the current cash opex & balance sheet gives it downside protection, and possibly much higher if they can increase their sales per square feet to an industry average...yet not a bad idea on selling on yesterday's pop.

Parsad

  • Administrator
  • Hero Member
  • *****
  • Posts: 8660
Re: WINN - Winn-Dixie
« Reply #16 on: May 16, 2011, 01:44:31 PM »
Good quarterly results by WINN.  Primarily by reducing capital expenditures.  As I mentioned in a previous post, the business' cash flows are terrific...they just need to redeploy it to where it provides a better return on capital.  They should be buying back shares until the stock is at 90% of book!  Cheers!

http://finance.yahoo.com/news/WinnDixie-Stores-Reports-bw-983970281.html?x=0&.v=1
No man is a failure who has friends!

beerbaron

  • Lifetime Member
  • Hero Member
  • *****
  • Posts: 1404
Re: WINN - Winn-Dixie
« Reply #17 on: May 16, 2011, 03:26:03 PM »
I'm pretty happy about the results, they are not bleeding market share any more which is great. Their press release talked about the renovated stores lifting the SSS... hopefully we can get some updates on their 5M$ stores.

Once this company is done patching holes it should generate a real net income top of 100M$ which would value it at 1B$. Problem is that at 5M$ a store it would take years to upgrade their remaining stores.

BeerBaron

claphands22

  • Lifetime Member
  • Sr. Member
  • *****
  • Posts: 370
Re: WINN - Winn-Dixie
« Reply #18 on: May 16, 2011, 11:20:23 PM »
from the press release

Identical store sales, which exclude stores that opened or closed during the quarter, decreased 0.5% for the third quarter compared to the prior year period. The decline in identical store sales was attributable to a decrease in transaction count of 1.7%, which was mitigated by a 1.3% increase in basket size. Identical store sales were negatively impacted this quarter by competitive activity and other market factors, which were partially offset by inflationary price increases that were passed through in selected categories, an increase in sales in remodeled stores, and favorable results from the Company's computer generated ordering and fuelperks!(R) Rewards initiatives.

Still seeing same store sales decline year over year. I'd rather have an increase in transaction count than basket size, since transaction count tells me more people are shopping at the stores and WINN is being more competitive. Although the increase in basket size & decrease in transaction could just be a manifestation of high gas prices where shoppers are choosing to be more efficient with their gasoline-miles. The press release makes me think it's a combination of high gas prices & competition, looking forward to the conference call.

Still cheap based on #'s and possible upside if SSS could ever increase.

PPS 7.34
Cash per share 3.12
PP&E per share 11.9
Book value per share 15.35
100M ebitda per share 1.79
100M depreciation (taken for capex, although from reason I think management said 70M) per share 1.79


Parsad

  • Administrator
  • Hero Member
  • *****
  • Posts: 8660
Re: WINN - Winn-Dixie
« Reply #19 on: May 18, 2011, 01:56:59 PM »
Closed at $8.88 today!  We are completely out now.  Cheers!
No man is a failure who has friends!