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Chris DeMuth Jr.
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"It's not given to human beings to have such talent that they can just know everything about everything all the time. But it is given to human beings who work hard at it - who look and sift the world for a misplaced bet - that they can occasionally find one." - Charlie Munger I look... More
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  • Aaron's Is Worth $40 Or Whatever 5 comments
    Feb 27, 2014 1:27 PM | about stocks: AAN, RCII, BRK.A, BRK.B

    "I can tell you, I just saw that about five, ten minutes before this conference call started; we will take a look at it and evaluate it or whatever."

    - Aaron's CFO Gil Danielson regarding an unsolicited offer for the company

    Mr. Danielson was less than convincing that he is taking the offer seriously. He should. The bid came from Vintage Capital Management, which already owns 9.5% of the company and is was at one point the company's second largest franchisee. Vintage management knows the company extremely well and wants to significantly underpay. They would need to pay up into the high $30s in order to consummate a deal.

    Aaron's CEO, 71 year old Ronald Allen, originally took the job on an interim basis. He recently was given a new severance package in the event that he retires. If he does not choose to engage with Vintage, it is likely that they will nominate a slate of board members when the nomination window opens around Monday March 17, 2014. Vintage's Brian Kahn is building a portfolio of companies with the same kind of value focus as at Berkshire Hathaway (BRK.A/BRK.B). If he is able to successfully acquire AAN, he will build a serious competitor to Rent-A-Center (NASDAQ:RCII) in the rent to own industry.

    Disclosure: I am long AAN.

    Additional disclosure: Chris DeMuth Jr is a portfolio manager at Rangeley Capital, a partnership that invests with a margin of safety by buying securities at deep discounts to their intrinsic value and unlocking that value through corporate events. In order to maximize total returns for our partners, we reserve the right to make investment decisions regarding any security without further notification except where such notification is required by law.

    Stocks: AAN, RCII, BRK.A, BRK.B
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Comments (5)
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  • floppity2
    , contributor
    Comments (19) | Send Message
     
    I've taken a look at this and never got comfortable with paying 15x FY2015 for this kind of business. I never quite understood why their recent customer traffic has been so weak. Expansion opportunities are also limited given US market saturation and international expansion comes with operational risks.

     

    In addition, I don't think their business is going to perform like the '08-'10 period on a relative basis given I believe their business held up relatively better due to lack of customer base owning homes and therefore not suffering a major home equity shock in 2008.

     

    Would probably be a buyer in the low $20's.
    27 Feb, 01:42 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4093) | Send Message
     
    Author’s reply » Aaron’s (AAN) hit a new 52-week high.
    12 May, 11:48 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4093) | Send Message
     
    Author’s reply » (AAN) hits a new 52-week high
    20 Jun, 11:25 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4093) | Send Message
     
    Author’s reply » (AAN) hits a new 52-week high.
    24 Jun, 08:34 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4093) | Send Message
     
    Author’s reply » (AAN) at a new 52-week high
    30 Jun, 12:39 PM Reply Like
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