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Author: etalian One star, 50 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 154  
Subject: How wide is the moat? Date: 7/9/2007 5:06 PM
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I'm very interested in this stock and have looked at several sources of information during my research. One thing I continue to read about is the fact that FAST has a "wide moat." The previous post (entitled "Fastenol's Hook") mentioned that the competitive advantage is due to their inventory and reliability. Although I agree that these do create a bid of a moat, I'm not sure if I would go as far as to call it a wide one. To me, wide moats are competitive advantages that are almost impossible to uproot (think of Coke's name brand or eBay's auctions). It seems to me that another low cost producer could come along and create the exact same business model (reliable and extensive inventory) as FAST and compete quite well. Aren't fasteners more of a comoditiy type product anyway? Interested to hear what everyone thinks.

Elliott
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Author: Metal27 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 144 of 154
Subject: Re: How wide is the moat? Date: 7/10/2007 2:16 AM
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Elliott,
Fasteners and everything else FAST sells are indeed commodity items. But as my friend pointed out, the ability to consistently deliver the correct fastener when it is needed is what sets FAST apart. The example he gave was of a peculiar E-ring which even the vehicle's manufacturer could not identify, let alone supply. FAST did both, quickly, and ended up with a large order that kept the vehicles running.

When you can rely on a supplier to help you in a situation like that, they have built a wide moat. All a would-be competitor can offer is lower price and promises. What good are lower prices when the promised part is not delivered and your operation is affected? People can get fired for switching to a supplier who causes delays.

I suggest you take a look at the FAST catalog--their inventory is huge! The investment required to obtain and match their inventory would be considerable and the payoff uncertain.

FAST does have a few problems, principally their ties to the very cyclical construction and automotive businesses. But FAST is an excellent example of how consistently good management can provide a really valuable service at a profit and create a niche for itself in the process.

Cheers,

Scott
(yes, I own the stock)



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Author: Metal27 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 145 of 154
Subject: Re: How wide is the moat? Date: 7/12/2007 1:03 PM
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Elliott,
I hope you made your decision before today. Sales and earnings are up again this quarter, as is the stock price. I'd buy the stock either way--as Jesse Livermore said, "No stock is too high to buy and no stock is too low to sell."

See
http://www.marketwatch.com/news/story/fastenal-co-2q-net-up/story.aspx?guid=%7BDA88FA0D%2D92D7%2D4C00%2DAD1C%2D6C2AFF31E346%7D&dist=TQP_Mod_mktwN

Cheers,

Scott

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