Saturday, March 3, 2007

Home Depot (HD) Investors Conference...... Yawn

Talk about anti-climatic. A great number of people (yours truly included) were hoping to have some clarity on the fate of the Supply business during the investors conference on Wednesday. What we got was more of nothing. There wasn't anything said that was already alluded to during their earnings call last month. So, what do we think about the possible fate of HD Supply? The integration of Supply is going forward. HD expects their contribution of sales to go from 13% to 15% next year and unlike the retail operations, actually post earnings increases. This is good news for those of us who do not want it's sale as it increasingly makes the unit more valuable to management. Time is also on our side as the more time and money spent on the ongoing integration, the more unlikely a sale is. This is because the more integrated supply becomes into the overall HD operations, the more expensive it then become to unwind. Well, what should we do then?

Easy..... nothing. We wait until we get answers to our questions and then we act accordingly. Trying to guess what a new CEO is going to do is a bit like guessing what the weather here in New England will be next Wednesday, your guess is just as good and likely as anybody else's. So we wait, and wait and that is ok because we can't lose money waiting, we can and will if we "guess" and "guess" wrong. That, by the way is called gambling, not investing.

To quote Warren Buffet, "there has been many a time where the smartest thing I have done in investing is absolutely nothing..."

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