James, re. FLM: I don't think the legal liability is a factor --- yet.
From one of their '97 quarterlies:
"Furthermore, the company has been subjected to considerable unfavorable media coverage
stemming from the jury verdict announced in the David's litigation in early 1996. Although the
David's verdict was subsequently set aside and the matter ultimately settled, other customers have
made similar allegations in an attempt to alter their contractual arrangements with the company. See
Note 5 to the company's financial statements. The company believes that perceptions generated by
such legal proceedings have also negatively impacted sales."
But FLM is a dog. Still, they provide distribution to several thousand groceries, plus they've got some technical expertise in supply chain management. Maybe WMT is going to be the biggest and the baddest. And maybe Albertsons, Safeway are humongous and growing . But there's going to be a need for independents and a company like FLM to distribute to them.
I think maybe for me, it's a twister vs. Senior 'regression to the mean' kind of argument again. There hasn't been a year in the past decade when you couldn't have sold this stock for $20 (note: yes, I know that's not the mean). Maybe the distribution biz has changed, but I think, sometime in the next couple of years, FLM will hit $20 once again. So at 9-11, all in all, okay to buy as a value stock IMO. Perhaps a lousy way to look at it, but there you are. -g-. Paul |
