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Strategies & Market Trends : Buffettology -- Ignore unavailable to you. Want to Upgrade?

To: James Clarke who wrote (2591)	7/8/2000 12:18:05 PM
From: Michael Burry	1 Recommendation Respond to of 4691

Re: Gap, we all know Buffett liked it enough to buy some. It definitely has been in a sweet spot, extended temporally by its addition of economic tiers. But what I wonder is why everyone says it's 4-tiered structure appeals to all ages. I definitely see it appealing to nearly all income levels. But not all ages. My wife is a Banana freak, and she will often visit Gap because they are usually in proximity. And of all the hundreds of times I've been in these stores (trying desperately to think of something interesting to avoid developing a frown), I definitely do not notice a geriatric population. And in the case of Gap, the clothes are nearly as unappealing as those of Abercrombie. I don't think it is a crazy stretch to say Abercrombie could be the next Gap, because I think Gap is as much a beneficiary of a trend as Abercrombie - and it is primarily the kids-to-young adults crowd. But I also would double or triple discount my DCFs if somehow it had become stuck in my mind that something was "the next" big thing. One of the oldest rules in the investor's handbook - there is NEVER a "next" big thing. Gap is like any retail organization. The gravy train has passed, and it will not give and give to investors for decades to come. What growth has not yet been realized has been fully discounted. So that's where ANF's advantage lies. If it can become half the next Gap and grow 4 times in size, we've got a winner. Mike