Hi everyone,As you may have heard, SVU's board of directors today fired Heckert (the CEO brought in after the Albertson's purchase to turn the situation around) and appointed Wayne Sales, the chairman as the new CEO. Here's a look at the letter he sent employees today: http://blogs.wsj.com/deals/2012/07/30/supervalus-new-ceo-we-...Besides the obvious "let's all get together" stuff, there's not much there. Heckert had a plan, was accelerating the plan, but now he's out. The board brought in the external banks for strategic alternatives and now the chairman is the CEO.Here's another piece on Sales: http://blogs.marketwatch.com/thetell/2012/07/30/what-superva...Here's Sales' bio from Capital IQ: Mr. Wayne C. Sales served as the Chief Executive Officer and President of Canadian Tire Corp. Ltd from 2000 to April 27, 2006. Mr. Sales is a retail executive with more than 35 years of experience. Mr. Sales has an extensive experience within the retail industry, where he held senior positions in merchandising, buying and regional store operations management with a major U.S. retailer. Prior to joining Canadian Tire in 1991, he held senior leadership roles with Kmart Corporation in marketing, merchandising and operations. He served as an Executive Vice President and Senior Vice President at Canadian Tire Retail. He serves as Non Executive Chairman of SUPERVALU Inc. Mr. Sales served as Vice Chairman of Canadian Tire Corporation Ltd since April 4, 2006. 2000. Mr. Sales has been a Director of Albertson's Inc. since June 22, 2005, Supervalu Inc. since June 28, 2006, Georgia Gulf Corp. since September 17, 2007, Discovery Air Inc. since August 2008, Tim Hortons Inc. since 2006 and New Albertsons Inc. since June 22, 2005. He serves as a Director of Canadian Tire Financial Services Limited, Canadian Tire Bank and Mark's Work Wearhouse Ltd. He serves as a Member of the Advisory Board of Ryerson University's School of Retail Management. He served as a Director of Canadian Tire Corporation Ltd from 2000 to May 10, 2007. He was Chair, Communications and Media for the United Way of Greater Toronto's 2002 campaign. His bold strategies for revitalization of Canadian Tire have been recognized with several industry awards, including Distinguished Retailer of the Year in 2004 by the Retail Council of Canada, and CEO of the year by Canadian Business Magazine in 2005. Mr. Sales is a graduate of the Advanced Management Program at Harvard Business School.From that it's clear that he serves on many boards, which is not necessarily a good thing, especially with him taking the CEO role. What's disturbing to me is the last bit, starting with "his bold strategies." I'm not sure how much of these bios the person (or his/her PR flak) writes, but when someone starts boasting about the awards won, that kind of turns me off.So, I'm tempted to get out of the position of SVU, take my lumps (it was a turnaround that failed, so far), and move on.On the other hand, research shows that moving too quickly often leads to underperformance, especially on the selling side. Today, the Street loved the new CEO, boosting shares 12% to $2.24 (from $1.99). If he can turn the company around and/or oversee the selling of some of its brands, then the share price could rebound strongly from here. On the other hand, this thing could be just too big of a mess.Heckert, to me, was a known quantity. His strategy seemed reasonable (for instance, giving more control to the local stores to let them cater to their communities more) and accelerating the plans seemed alright. Sales, on the other hand, got his board position because he was on Albertson's board and came across with the acquisition of Albertson's by Supervalu. Not the best of recommendations.Okay, typing this out has helped me think about this. The question, really, is has my investment thesis been busted? The whole thesis was that the company was turning itself around and that the debt-owners were pricing in success while the equity owners were not. The short-term bond holders have brought the price back up to the mid-$90 range (on a $100 par), while the others have traded down and not recovered since the quarter's results. The short-term seems safe, but the mid- to long-term doesn't.With this move, did the board get impatient with Heckert's moves? Did Sales convince them he could do better? How long will it take Sales to get a firm understanding of where the company stands and implement his own plans? Does he have realistic plans? With that number of board seats, is he a professional board member, instead of a CEO?I'm vacillating between selling on all this uncertainty and waiting it out another quarter to see what he can do and how the market takes it.And I say writing down one's thoughts helps the decision process. Ha!Heck, 8 pm tonight, better thinking tomorrow I hope.Cheers,Jim
Okay, typing this out has helped me think about this. The question, really, is has my investment thesis been busted? The whole thesis was that the company was turning itself around and that the debt-owners were pricing in success while the equity owners were not.Hi Jim,Our father posted recently on the MF Options boards about investing lessons from the poets. One part of the post was kind of funny and seems relevant here, so with his permission we reproduce it:***************** 4. Do Not Change Your Investing Thesis to Match Changes in the Business.When should you sell your stock in Uncle Sol’s farm?my Uncle Sol's farmfailed because the chickensate the vegetables somy Uncle Sol had achicken farm till theskunks ate the chickens whenmy Uncle Solhad a skunk farm . . . .ee Cummings********************* He had changed his name a lot – it is now ADrumlinDaisy; before he was MazonCreekRich and before that BrokeInTheBurgh. Captain HaikuMartha and VictoriaWho did not do haiku because who wants to compete with ee cummings?
Thanks, guys. I was leaning one direction already and your post (and the poem) helped crystallize the decision.Would you mind posting the link you copied that from? I'd like to read the whole post.Cheers,Jim
Would you mind posting the link you copied that from?Hi Jim,Here is the link.http://boards.fool.com/1321/ot-new-members-should-not-read-3...His approach to investing is very different from the Stock Advisor approach that we use.Captain HaikuMartha and Victoria
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