Thanks Klogg for sharing your thoughts, when i spoke of competitive advantage I was thinking from a retailers point of view - I have an IT business and I dont even have an account with DDR, because they dont distribute any product I need that I cant get from other distributers. Most of my stock comes from Ingram Micro with a few smaller companies that supply specialised hardware. A lot of the stuff that DDR sells is not exclusive, let alone providing any competitive advantage.
I am being very negative about DDR, most of that negative sentiment is an informal, personal process of inversion. I actually quite like the business, I hold a reasonable stake and would like to add to it - for me that involves exploring all the reasons NOT to add to my holding! I want to know why Mr Market doesnt see the same value as me, my simple FCF and EPS IV's are both north of $2.50, and the Equity valuation/earnings ratio is very healthy.
What screws my detailed FCF IV is the large growth in working capital and the debt. Even when I back out the recievables facility there is still what i regard as an unhealthy amount of debt relative to capital.
Anyway, while i go thru my internal debate the SP continues to fall, so if I do talk myself into increasing my holding I will be getting more value!
DDR Price at posting:
$1.54 Sentiment: Hold Disclosure: Held
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