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No. of Recommendations: 4
Thanks for the insight on Expeditors. I have to admit that I don't fully understand the competitive dynamics and threat of new entrants making the economics less attractive. I did note the strategy of full integrated information systems which is incredibly important for a company dealing with time sensitive logistics issues. I have seen how decision making at companies can be crippled due to poor integration of legacy systems and I cringe whenever I read about a company embarking on systems integration after a merger or acquisition. It seems like good IT systems integration is a necessity for companies using a rollup strategy to gain scale.

Thirdly, Pete Rose is almost 70. Jordan Gates is equally impressive and could step in if needed, but i worry more about drive/motivation of branch managers. EXPD mgmt has long boasted that managers at their bigger branches make more than senior executives of some publicly traded peers. Are these guys still hungry enough after a great run?

That's actually a very familiar problem since Berkshire managers also tend to be independently wealthy with no economic reason to continue working. I don't know much about how much these managers enjoy their work or what the motivation level really is ... the good news is that Expeditors seems to have a very good succession plan in place at individual branch locations and the policy of promoting from within and providing unlimited potential compensation based on branch operating profit could attract the next generation of talent.

I have no reason to think that Expeditors might be a Berkshire target but lately I have been looking at higher quality companies with an emphasis not just on how they are currently structured but on how they could be structured as Berkshire subsidiaries. This is particularly interesting when you have a company like Expeditors sitting on large amounts of excess cash due to risk aversion concerns that would not be relevant as a Berkshire subsidiary. I do think that EXPD stock is on the expensive side still but it is not in my nature to be willing to pay much for growth potential. It is surprising that the stock help up well during the market crash. I guess there is little hope for it becoming truly "cheap" if it didn't get cheap in '08/'09...
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