Mathew Klody of MCN Capital Management presented his in-depth investment thesis on Guess (NYSE: GES) at Best Ideas 2018.
Guess is a branded licensor, wholesaler, and retailer of apparel and accessories. Guess operates globally, generating $2+ billion in annual sales. Retailers as a group have been under tremendous pressure over the past year as anything seen going up against Amazon is presumed to face imminent demise. Long Amazon/short traditional retail has been a big winner and is now a popular, crowded theme. In a momentum, ETF-driven world, individual opportunities arise from crowded macro trades. Guess is a great example of that. The balance sheet is pristine, and Guess owns a high-margin licensing business. Two years ago, Guess hired a new CEO, Victor Herrero, who built a $2 billion business in Asia Pacific for Inditex, one the world’s largest and most successful fashion retailers. He quickly and aggressively put in place some key strategic initiatives. These include (i) consolidating a saturated American store base, (ii) investment and expansion in international markets, and (iii) internal initiatives aimed at more effective branding. He also incorporated some of the best-of-breed design, sourcing, and distribution methods of Inditex. Growth in Europe and Asia is accelerating as this investment period comes to an end. Mathew sees a path to $2+ EPS, and with the cash on the balance sheet, Mathew sees fair value of $30+ per share.
About the instructor:
Mathew T. Klody, CFA is the Founder and Managing Partner of MCN Capital Management LLC, a fundamental, intrinsic value oriented long/short investment partnership based in Oak Brook, IL. Prior to founding MCN, Mathew was the Senior Vice President and Analyst at Chicago-based Sheffield Asset Management, a long/short equity hedge fund from 2007-2012. From 2003-2007, Mathew was an investment analyst at the holding company of Alleghany Corporation (ticker “Y”) covering the equity portfolio, corporate development and the reinsurance portfolio. Mr. Klody began his career as a credit analyst at the Global Corporate and Investment Bank at Bank of America. Mr. Klody is a Chartered Financial Analyst. Mathew graduated summa cum laude from the University of Notre Dame with a degree in finance and business economics and has served as a guest lecturer to the Notre Dame Institute for Global Investing, the Behavioral Finance class and the Applied Investment Management program at the Mendoza College of Business at the University of Notre Dame. Mathew was chosen to speak at the March 2017 Grant’s Interest Rate Observer conference and has been frequently interviewed for and quoted in the publication. He was selected as an emerging manager speaker at Invest For Kids in Chicago in November of 2017. He serves as a member of the Parish Council at St. Joan of Arc Church in Lisle, IL.
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