Elliot Turner of RGA Investment Advisors presented his in-depth investment thesis on Walgreens Boots Alliance (Nasdaq: WBA) at Best Ideas 2018.
Says Stefano Pessina, “Many people say that I am a dealmaker, which is probably true. But I am always very cold when I do a deal. A deal must have a strategic logic, and it must create value.” Since William Thorndike’s The Outsiders captured investor imaginations, everyone has been searching for the “ninth chapter”. According to Elliot, Stefano Pessina might be a worthy nominee. Pessina is a nuclear engineer who turned his father’s struggling drug wholesale business into a series of 1,500 acquisitions, leading to a 14% stake in Walgreens.
Walgreens Boots Alliance had a rough year in the stock market in 2016, thanks to repeated threats of Amazon’s entry into the pharmacy business and a protracted attempt to take over Rite Aid. 2018 begins with Pessina’s first truly blank slate in order to execute his vision of a global scale player in wholesale and distribution with a unique focus on front-end optimization.
Walgreens has a long history of fulfilling customer needs amidst a dynamic backdrop. Early in its history, most of the company’s profitability came from the front end, while now the pharmacy drives the bottom line. Change is really the only constant, and Pessina is the ultimate leader steering the ship, with his interests aligned. The combination of a business that fills an essential life need, a cheap valuation, and a focused owner-operator makes WBA a “best idea” for 2018.
About the instructor:
Elliot Turner is a co-founder and managing director at RGA Investment Advisors, LLC. RGA Investment Advisors runs a long-term, low turnover, growth at a reasonable price investment strategy seeking out global opportunities. Elliot focuses on discovering and analyzing long-term, high quality investment opportunities and strategic portfolio management. Prior to joining RGA, Elliot was managed portfolios at at AustinWeston Asset Management LLC, Chimera Securities and T3 Capital. Elliot holds the Chartered Financial Analyst (CFA) designation as well as a Juris Doctor from Brooklyn Law School. He also holds a Bachelor of Arts degree from Emory University where he double majored in Political Science and Philosophy.
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