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

To: Paul Senior who wrote (16352)	2/4/2003 3:44:52 PM
From: Wyätt Gwyön	Read Replies (4) \| Respond to of 78519

Paul, re: FLM, this is one of those stocks that makes you laugh and makes you cry. it was just about the best-performing value stock out there in 2001, more than a triple at one point. i had bought it after reading about them in OID in 2000, and i felt like an idiot for selling in the high teens as the thing blasted to 36. it was one of those stocks the makes diversification sound like "de-worse-ification" as they used to say. but since that time, it has been a one way ticket to poverty. Longleaf has continued to back this stock all along. their 2002 annual report, which came out just this week, had this to say about FLM (my emphasis in bold): "Although Fleming rose 32% in the fourth quarter, the stock fell a total of 64% over the course of the year. Most of the decline came in the third quarter when rampant short selling compounded the pressure on the stock brought by several pieces of bad news -- weak wholesale results, a lower than expected price for its retail assets, and instability at Kmart, its largest customer. While Fleming's contract with Kmart will not yield the originally planned level of benefits, the value of the company's other supermarket and growing convenience store business remains stable." longleafpartners.com i have noticed them knock the shorts several times. they said similar things in the latest OID, and also boasted about how glad they were to take advantage of the volatility to buy more stock in their great "partner", FLM. this has got to be one of the bigger blow-ups for them, but i would be interested in their take at this point. is this just a death spiral, or is it a ten-bagger waiting to happen? hopefully Longleaf will address this issue in some depth on their next webcast (one of the few mutual funds i know of that provides such a service--just one of the things that sets Longleaf apart from the riff-raff which makes up much of the industry). in my mind, FLM has taught the real lesson: diversification is a virtue--because you never know when today's greatest stars may become tomorrow's biggest losers.