MagicDiligence

Quick Take: Herman Miller Inc.

> What do you make of Greenblatt's system? I read his book last year
> but decided to tweak it a bit by using his simple approach to just
> get me the first screen, then apply some DCF to the companies that
> I thought had competitive advantages, high barriers, for undervalued
> plays.
>
> Are you doing something similar along those lines? I couldn't jump
> straight in blindly and use his system. The back testing research
> he did shows good results, but I'm not sure if he ran his back test
> across every possible permutation of stock sets over the same period.

What you describe is basically what I'm doing at MagicDiligence. Several MFI stocks are also faddish, some have poor financial health, others are cheap because they are in declining industries. I steer readers away from those and into the truly great ones that can sustain competitive advantage over a long period of time.

Quick Take: Herman Miller Inc.

Thanks for the great comments. I agree that building an office furniture company to Herman Miller's scale is difficult. But scale does not provide them with any significant competitive advantage (especially as MLHR is a premium seller). A local or regional house can compete effectively, especially on price.

I completely agree that the company is well run. My main concerns are long term competitive pressures and of course near term macro-economic risks.

Thanks again.

Steve Alexander