Jean Pierre Verster of Protea Capital Management presented his in-depth investment thesis on AutoZone (US: AZO) at Best Ideas 2021.

Thesis summary:

AutoZone is a specialty retailer of automotive replacement parts and accessories through 6,000+ stores in North America and Brazil, with a market cap of ~$27 billion. It sells to do-it-yourself (DIY) and do-it-for-me (DIFM) customers.

The auto parts industry has attractive business attributes and is characterised by thousands of SKUs and customers being time-sensitive rather than price sensitive. The four major players in the industry compete responsibly and rationally. In Jean Pierre’s opinion, auto parts retailers will be able to defend their moats effectively against e-commerce players like Amazon.com and Carparts.com as well as threats such as ride sharing and electric vehicles.

AutoZone has a strong culture, nurtured by co-founders Pitt Hyde and Peter Formanek since the day they opened their first store in 1979. Peter sadly passed away in early 2020. The company has an enviable track record of generating above-average returns for investors, with a long growth runway ahead.

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About the instructor:

Jean Pierre Verster is the founder & CEO of Protea Capital Management, an investment management firm headquartered in Johannesburg, South Africa. He was part of the investment team at 36ONE Asset Management, which manages the largest hedge fund in South Africa, from 2010 to 2016. He partnered with Fairtree Asset Management thereafter to launch the Protea range of hedge funds. In 2019, he founded Protea Capital Management as a stand-alone investment management business. Since 2015, Jean Pierre also serves as an independent non-executive director at Capitec Bank, the largest retail bank in South Africa by number of clients, where he is chairman of the audit committee.

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