what would buffet do?, page-11

APJAPJ

You need to get your facts straight, unless that is not your agenda.

Collins is not highly geared. Its balance sheet is geared less than 35% with debt AND it is generating enough cash to self fund all its refurbishments and new stores and still pay out 50% of its profit as a dividend.

If you look at the Trading Guidance update released to the market on 4 November, the company was in line with prospectus forecasts for the first 5 months of the half year and then had a bad Sept/October.

The CEO has been involved with this business for 32 years and built it to where it is today. He was backed by a private equity firm in a management buyout. No matter what you may feel about private equity firms, one thing that is certain is that a key ingredient to any transaction they undertake is to back a GOOD management team.

Personally, I think they probably handled the announcement badly as they don't have public company experience. But the market will remain sceptical now until they can demonstrate that the poor performance in Sept/Oct wasn't a one off and there isn't something more sinister (ie. they are lying to the market). If they can re-establish their credibility (assuming they have credibility), then this is a perfect stock at current prices for a value investor