July 29, 2013 Comments

The most recent of the free newsletter was sent out…


On Monday the S&P 500 was down 0.4% and Toronto was up 0.2%. I did not note anything of much interest happening with our stock picks.

It is in the news that Hudson’s Bay Company will purchase Sak’s Inc.  for some $2.9 billion. Hudson’s Bay will pay $16 per Saks share. Saks shares appear to have topped out with a needle peak at About $36 in early 1999 and then crashed to $5 and then clawed back to $20 and bumped around only to crash to just under $2 in March 2009 (just another of the sweet sweet bargains that were around in early 2009 as the market was predicting the end of the financial world or something). Then it clawed back to the $10 range and finally then on up to $15 on rumors of a sale.

Apparently Hudson’s Bay can extract some value by selling off and leasing back the real estate. Though one wonders why Sak’s could not have done that themselves.

I visited Saks on fifth avenue, Manhattan in March. As I documented in the daily comments below, I was not overly impressed.  The place was snooty. I am not sure why store clerks have earned the right to be snooty. No price tags on the first floor or two. The difficulty is that these days it is too easy to comparison shop and it’s hard to maintain huge margins even on luxury products unless they are proprietary brands. It’s the luxury brands that have the cachet and not so much the luxury retailers.

I don’t particularly see a great future for this combination, but we shall see.


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