Landstar is a good Ensemble stock and I always enjoyed your write-up/video(s) on it. The biz model is great, but given how deep is the downcycle for trucking, I feel like a higher beta name like Heartland Express might generate higher risk adjusted return.
Ingles is cheap, but the land thesis has been busted in prior examples including Seritage, a Buffett name and he lost hundreds of millions. Catalyst has no time horizon of materialization. Leon’s Furniture at least has the catalyst there about land sale and redevelopment so I’d probably prefer that (no position though).
Excellent points. I haven't followed Landstar in two years, so this was my first glance in a while. The drop in BCO count is worrisome and they haven't been executing as well as they should in terms of BCO recruiting/retention. Ultimately, I think Landstar's best placed as an acquisition for a firm with more operating leverage, higher capex needs, and seeking a FCF generating asset. As a standalone business, it's kind of like a bond with a variable coupon tied to spot rates - not ideal for someone who wants to bet on the trucking cycle (if you have a bold thesis, buy one of the higher beta/operating leverage names as you suggest).
On Ingles, yes, I'm skeptical of real estate-valuation unlocking theses especially when one person controls the decision and is young enough (late 50s) where he doesn't necessarily need to make a move anytime soon. The optionality value is low. Owning the real estate, however, can provide a cost advantage versus peers who have to pay higher rents in an in-demand region and provide some rental income to boot. My focus would be on the underlying grocery operations rather than the real estate value.
I agree that Imkta is content to let the grocery business muddle along. Many of their stores are deteriorating and losing business to competitors, but they continue to prioritize buying real estate over current operations.
Landstar is a good Ensemble stock and I always enjoyed your write-up/video(s) on it. The biz model is great, but given how deep is the downcycle for trucking, I feel like a higher beta name like Heartland Express might generate higher risk adjusted return.
Ingles is cheap, but the land thesis has been busted in prior examples including Seritage, a Buffett name and he lost hundreds of millions. Catalyst has no time horizon of materialization. Leon’s Furniture at least has the catalyst there about land sale and redevelopment so I’d probably prefer that (no position though).
Excellent points. I haven't followed Landstar in two years, so this was my first glance in a while. The drop in BCO count is worrisome and they haven't been executing as well as they should in terms of BCO recruiting/retention. Ultimately, I think Landstar's best placed as an acquisition for a firm with more operating leverage, higher capex needs, and seeking a FCF generating asset. As a standalone business, it's kind of like a bond with a variable coupon tied to spot rates - not ideal for someone who wants to bet on the trucking cycle (if you have a bold thesis, buy one of the higher beta/operating leverage names as you suggest).
On Ingles, yes, I'm skeptical of real estate-valuation unlocking theses especially when one person controls the decision and is young enough (late 50s) where he doesn't necessarily need to make a move anytime soon. The optionality value is low. Owning the real estate, however, can provide a cost advantage versus peers who have to pay higher rents in an in-demand region and provide some rental income to boot. My focus would be on the underlying grocery operations rather than the real estate value.
I agree that Imkta is content to let the grocery business muddle along. Many of their stores are deteriorating and losing business to competitors, but they continue to prioritize buying real estate over current operations.
How about Expeditors International of Washington - EXPD?
Thanks, Tyler. What's your sense of the family's priorities?