Tim Eriksen presented his in-depth investment thesis on FTD (NASDAQ: FTD) at Wide-Moat Investing Summit 2014.
FTD: Recent United Online spin-off; premier floral and gifting company, providing floral, gift and related products to consumers, retail florists, and other retail locations mainly in the U.S., Canada, the U.K., and Ireland. Recognized FTD and Interflora brands, supported by the iconic Mercury Man logo displayed in tens of thousands of floral shops. Sources of moat: 1) network of florists is difficult to duplicate; 2) scale allows FTD to more easily add ancillary products such as cakes or gifts. This allows the company to operate with negative working capital (it collects from its customers before having to pay its florists) and to have stable, predictable cash flows. ~$50 million of annual free cash flow (8-9% FCF yield) would allow FTD to be debt free in three years. FTD authorized a $50 million share buyback program in February. Eriksen thinks it is likely that FTD is acquired after the two-year timeframe from spinoff (late 2015 / early 2016) as FTD has a history of private equity involvement due to the predictable (and modestly growing) cash flow profile.
About the instructor:
Tim Eriksen is the President of Eriksen Capital Management, LLC. He is a registered investment advisor representative in Washington and California, and provides portfolio management services to individual accounts and private funds. Tim has a Masters in Business Administration from Texas A&M University, and Bachelor of Arts degrees in History and in Political Studies from the Master’s College. From 2004 to 2005, Tim worked as an independent contractor, primarily for Walker’s Manual Inc., a publisher of investment books and newsletters that focuses on unlisted stocks, micro-cap stocks and community bank stocks. Prior to his work for Walker’s Manual Inc., Tim was employed from 1999 to 2004 by Peter Kiewit & Sons, one of the country’s largest general contractors, most recently serving as an Administrative Engineer on the $600 million Benicia-Martinez Bridge project.
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