Monday, August 3, 2020

Wa Un-Bashed

It feels like just 80 days ago that I wrote about Wabash as a beaten down ($7 share price) manufacturer of trailers that is capitalized to weather a possible multi-year storm. Last week, however, the company traded for $13, which is around what I believe it to be worth and so I sold all my shares.

Revenue fell 46% in the second quarter, but somehow the company was able to turn an operating profit thanks to a deceptively variable cost structure. Investors decided to pile in now, rather than a couple of months ago when shares were dirt cheap. *shrug emoji*

It is pretty remarkable how some names have doubled or tripled from their Covid lows, while others have barely moved. I don't think I can predict which ones will be favoured by Mr. Market next, so I just stick to buying businesses at discounts to what I deem to be intrinsic value. As such, I had to exit this name to free up capital for investments where I see margins of safety.

Disclosure: No position


Anonymous said...

What are your thoughts on Big 5 Sporting Goods?

This company has zero debt, guided for $1-$1.30 in EPS for Q3, and trades at $5.50/sh. It is a net-net retailer whose net current asset value, I believe, is around its stock price.

It has generated a ridiculous amount of free cash flow YTD (I believe close to half its market cap).

Enjoy your blog.

Saj Karsan said...

Thanks Anon,

No opinion on BGFV. I find retail incredibly difficult to have much confidence in. No customer switching costs etc.