Stephen Dodson presented his in-depth investment thesis on HD Supply (Nasdaq: HDS) at Wide-Moat Investing Summit 2016.
HD Supply is one of the largest industrial goods distributors in the US. It distributes maintenance, repair, and operations (MRO) goods for facilities, water infrastructure, and construction. A former roll-up, HD Supply is achieving scale and seeing significant operating leverage in all three of its businesses. Its growing materially faster than its markets, gaining share organically at will, in a large, fragmented market. As a route-based delivery business, its facilities maintenance business has a competitive advantage against new entrants, as well as attractive contribution margins for additional sales. Combined with lower interest payments, HD Supply’s earnings are expected to grow significantly in the coming years, while the business trades for less than 11x 2017 earnings.
About the instructor:
Stephen Dodson founded the Bretton Fund in 2010 and serves as its president and portfolio manager. Most recently, Stephen served as president of Parnassus Investments, which was founded in 1984 and manages the Parnassus Funds, a family of mutual funds for individual and institutional investors. Stephen was with Parnassus from 2002 to 2008 and served in a number of areas within the firm, including chief operating officer, portfolio manager, and chief compliance officer. In 2008, Institutional Investor News named him one of the 20 Rising Stars of Mutual Funds. He is a board member of the philanthropy group Full Circle Fund, serving on its executive committee, and has led projects for education reform in California. Prior to Parnassus, he worked for the venture capital group of Advent International, a private equity firm, and was an investment banker for Morgan Stanley in New York and Menlo Park. He holds a BS in business administration from the University of California, Berkeley.
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