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

To: sjemmeri who wrote (18695)	2/18/2004 7:02:12 PM
From: David	Read Replies (1) \| Respond to of 79019

Steven: I am interested in your thoughts on ANF. I am a long term holder and tend to have mixed feelings about the company. I was hoping to sell covered calls backed up by my holdings sometime soon if the share price trades at an unreasonably high price. That hasn't happened for several years now, imo. The company's clean balance sheet and large cash supply encourages me to keep holding on. Despite the recession and other troubles the company has had good earnings growth and sales growth. Management could be viewed as shareholder friendly, although not completely so due to its stock option program. But shares outstanding have reduced over the past several years through buybacks; now the company is offering a $.50 dividend; and the company is a supurb net cash generator and earns high returns on equity. I listened to the conference call and it seems the company is slowing down its store expansion and will be concentrating on generating higher store sales through better marketing. I hope this is not a sign of concern if Jeffries can no longer geographically expand the Abercrombie concept. A further difficulty is visualizing what the company will be in five or ten years, although I suppose there will always be a teen/college market and there is no reason to believe Abercrombie will lose its advantage in marketing to that segment although there is stiff competition and every gerneration of teenagers brings new styles and fashion tastes. Seems a bit tricky to guage. Abercrombie has proven capable though. I would like to be in this stock at some point when the tailwinds are behind it, a better economy, no marketing blunders, a better mens fashion trend. The company seems to get hyped up quite a bit when its hitting on all cylinders. Otherwise its a fairly consistent earner and posseses a good balance sheet and seems to have somewhat of a marketing edge in its target market, perhaps protecting the downside. The dividend might help out on that score too. If you don't mind, could you let me know what you think is the downside and whether you think the company is overpriced at this point and what caused you to decide to sell. Thanks.