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However, even at a company without the control issues of Dillard's before taking a position an investor should ask themselves if they trust management. This is even more crucial at Dillard's. If you do trust Dillard's management (family) though then you might be getting a deal.

It's interesting that you raise the question above of trusting management. I didn't elaborate on it initially, but the existence of a dual-class structure where one group gets 10x voting rights and therefore control of management, the board, and by extension compesation tells me trusting management means I'm taking on extra risk. Very large amounts of risk.

I can understand that historical performance of certain companies may indictate otherwise, but the lack of a gatekeeper keeps me away except for some rare deep-value situations.

There are a couple cases where I've thought long and hard on the past. Claire's and Boston Beer Works. Neither has been deep-value for a while, but thus far they're the only two where over a long peroid of time I've talked myself into taking a small "chance" on a dual-class structure investment.


Nate Parmelee
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