Rodrigo Lopez Buenrostro of KUE Capital presented his investment thesis on off-price retailers Ross Stores (US: ROST) and TJX Companies (US: TJX) at Wide-Moat Investing Summit 2022.
Thesis summary:
Off-price retailers are great businesses to own, particularly in weaker economic times. TJX and ROST, the two largest players, offer an opportunity for patient investors to participate in a business model that consistently generates ROIC of 40+%, is counter-cyclical, and generates strong FCF to the equity.
Bargain retailing is a boring, non-glamourous business that is fairly well insulated against the e-commerce trend and serves the purpose of cleansing traditional retailers of excess inventory.
Just like TJX and ROST focus on buying inventory at bargain prices, the market is offering a bargain entry point for these businesses, which deserve a place within a portfolio of long-term compounders.
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About the instructor:
Rodrigo Lopez Buenrostro is a Partner at Kue Capital where he invests to preserve capital over the long run. He pioneered the asset management division within the firm and divides his time between equity research and manager selection with a global mandate. Previously, Rodrigo worked as a summer equity analyst at SW Investments, a value-focused hedge fund in Chicago. He began his professional career as an Investment Banker at BBVA. Rodrigo is also an MBA graduate from Chicago Booth Class of 2015 where he earned a concentration in Analytic Finance and was actively involved in the Investment Management community. He studied Business and Accounting at ITAM (Mexico Institute of Technology) for undergrad where he wrote his thesis on hedge funds and started to invest personally. Rodrigo has always been passionate about finding the real value of assets while negotiating with Mr. Market, reading, and volunteering to teach basic concepts related to investing.
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