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

To: ArtAlley who wrote (6225)	3/6/1999 4:10:00 PM
From: Michael Burry	Read Replies (2) \| Respond to of 78471

My premise for further research into CPU: Leverage (operating, not financial). CompUSA has the right name, and in many places the right location. The stores are fun to shop (I rarely leave without buying something), and many regular people think CompUSA when they need a part tonight, tomorrow, or early this week. From a customer's perspective, I find the prices comparable and in some cases better than the first placesI look on the internet. There's a lot of sales there. There's also an internet presence which is not insignificant. For smaller-ticket items, CompUSA is a first or second thought for a lot of people. From a contrarian investor's perspective, I like that everyone hates the stock, and that there is a specific event (the computer city acquisition) that everyone points to as the reason to hate the stock. It is not hard to imagine, 5 years from now, people looking back at this price shakeout and saying, "how could people have thought that COMPUSA would disappear? And why did they let the Computer City acquisition scare them off? Didn't they see that balance sheet?" From a business perspective, I see an inventory nightmare. Economies of scale would seem to be very important in this business, and hence the Computer City acquisition doesn't bother me too much. The right manager, the right concept, and I can see CompUSA earning just a few percentage points higher margin on all that revenue. I'm waiting for a steal on this one - <$4.80. I want it at less than book and 6-7% of sales. But further due diligence is ongoing, and my target may change. This may be a case of buying crap at half the going rate for crap, but I like the wildcard of potential margin expansion at these levels and am balancing that against the competition factor. Good investing, Mike