Alimentation Couche-Tard (ATD.TO)

Didn't care for its bid to acquire Seven & I, so they sold. This could be one deal too many; could indeed be game-changing, but not in the way investors hope. They'd have to issue massive equity, take on massive debt, with integration risks.

If it walked away from the deal, he might be interested again.

He did own it. It was a good call for him. It was in an uptrend, based out, then failed. He sold it late last year. The chart shows lower lows and lower highs. Sell on any rally.

There are concerns it might be too diluted if the acquisition goes through. However the acquisition would be accretive and the 7-11 stores could become more profitable, as well as supplying more food for ATD's stores. It is still an uphill battle and if it doesn't go through it would allow ATD to concentrate more on organic growth.

Owned since his firm's inception. Great example of a compounder. Huge potential acquisition of 7-Eleven, and he'd prefer it not happen. This will cost much more than previous acquisitions, plus the people in Japan really don't want the deal. An acrimonious dance, and that risk is overhanging the stock. He really does not want them to overpay, wants them to stick to their track record of disciplined capital allocation.

ROC over 20 years is consistently in the 20% range. Wonderful, long-term holding. He added again around $69.

Struggling compared to the rest of the leaders. Underperformed market. With the Seven & I drama, this pick hasn't worked out. Now in no-man's land. Compare it to the wonderful chart for Loblaw.

At least they're talking now, trying to figure out how they can get regulator approval (the biggest concern). Success would give ATD 80k more stores, a near-monopoly in the US, so some would have to be sold. That's a distraction. Wrestling with a low-income consumer who's having troubles with inflation and trading down, which hurts the bottom line.

For him, it's a "heads you win, tails you win" situation. If successful, ATD can improve operations and pay back acquisition debt quickly. If not, they'll do other deals and buy back a ton of stock. An absolute bargain. Once we get through the issues with the US and NA consumer, this will return to compounding greatness as before.

Well positioned, nice footprint in NA and globally. It all comes down to the Seven & I deal -- last few weeks have seen more positive rumblings of an agreement. His speculative call is that the deal will get done. Company will eventually come through. If the stock can start to form a base here, a positive trendline should start to form (though may not get back to where it was last year).

Japan is "open for business" in this new world we find ourselves in, and that's an advantage for ATD. Yield is 1.07%.

Stock will go sideways while all the Seven & I talks go on, because this could be a $46B acquisition for a company with market cap of $64B. Sales are fairly flat, and this deal would get the needle moving again. If no deal, it'll be on the hunt for something else.

Great business, great management. Expensive. Off his radar unless the price changed a lot. Seven & I deal is great if they can do it. These guys are big, and he likes companies where there's lots of market opportunity ahead.

He doesn't know how the Seven & I scenario will play out. His investment thesis doesn't hinge on them completing the deal. If it goes through, massive win for shareholders, lots of efficiencies to be had. He's in the camp of the deal not going through and, if so, the company will be off to look for something else. 

Massive scale. No one can do what they do. As they've gotten bigger, margin profile has actually expanded. Gushes tons of cash. 17x PE is a very fair price to pay for a well-run business. Yield is 1.1%.

He'd consider stepping in again if the Seven & I deal could get done, but that doesn't seem to be the case. Thinks they're pursuing this transaction because growth opportunities have slowed. He owns, and would prefer, DOL and Loblaw in this space.

The Japanese owners of 7-11 have pushed back in this attempted take-over. It's really a global company, a consumer staple in convenience stores with habitual consumers. It's up in the air if the 7-11 deal will close, but if it does, ATD will be #3 in terms of brick-and-mortar sales in North America. A solid company.

Management's been on a charm offensive in Japan. Excellent serial acquirers, financially disciplined. A sensible deal to be had. Constructive outlook doesn't hinge on a deal. Strategy is to lure shoppers in with cheap fuel, then sell merchandise at high margins. Selling alcohol in Ontario has helped same-store sales. Yield is 1.1%.

Almost 20% ROE. Grew earnings 12% compound rate over last decade. Undemanding multiple of 16x PE. Great combo of value and growth.

Had held in portfolios almost consistently since 2000. Dynamic takeover story. Watershed moment for corporate Japan after 2 lost decades. Current management of Seven & I is underperforming. ATD management really wants this takeover, but they would never overpay. There's a deal to be had, and taking over just the NA assets is a possibility.

He has owned it for a long time. There is a lot of overhang on the stock due to the attempt to buy the Seven Eleven chain. Investors wonder what happens next since it didn't go through. It is incredibly well run and rationalizes their acquisitions. It is ahead of the curve in several ways.