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Strategies & Market Trends : Buffettology
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To: James Clarke who wrote (672)12/11/1998 1:43:00 AM
From: Shane M  Read Replies (1) of 4691
 
Thread,

I placed an order for Central Parking (CPC). I'm hoping it has found it's new price floor for now. We'll see. I bought a small position leaving room to average into a full position if I desire. As I've mentioned, I think this stock fits the Buffettology criterion.

The business is parking lots. They're busy buying up alot of the competition which should provide them some synergy and also pricing better pricing power. I haven't tried to evaluate the value of their real estate holdings. Am buying based on expected earnings/cash flow. CPC can churn out cash - lots of free cashflow. As long as they reinvest it intelligently I think it'll produce above average returns over the long haul. And if they want to stop buying up other lots and just pay a big dividend - I'm OK with that too. To a large degree they are capable of financing their own growth.

I like the business. People have to park cars or find alternate transportation. I'd think demand is fairly inelastic here. Competition can't just spring up across the road, because in many cases there's no place to build a new parking lot/garage. And it doesn't do the competition much good to build several blocks down because location is key.

As far as management - they seem to have done very well for the company up until the latest hiccup. Earnings and ROE are currently below from what we'd expect historically, and I'm using this opportunity to buy in. Part of my bet is that going forward performance will return more closely to that of the past.

Shane
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