Alimentation Couche-Tard (ATD-T)

The proposed acquisition may have been a bit aggressive. May have felt a big acquisition was needed to move the needle. Very well run. May not be a lot of big purchases left in the space unless you overpay or take on a lot of debt. Without acquisitions and integration, may not be that much room for earnings growth.

Growth was waning, needed to do a deal for next opportunity. He sold. Trading a bit above 200-week MA. Tremendous run from 2021-2024, so 18 months of chop is natural. Good operators, wouldn't want to be against them. Not a terrible entry point.

It's a massive positive they won't do the 7-11 deal--too big without issuing equity. Are top-notch buyers, though. The overhang now is economic uncertainty from a weaker consumer. Is a strong company and compounder.

It is dealing with a medium consumer and sluggish environment. he wants to see them continue acquisitions. It is buying back shares.

Japanese are not easy to negotiate with, and it's not to say that they won't come back and try again. Not a management deficiency that the deal wasn't completed. ATD is great at integrating. If they were able to get the deal done, he'd likely be back in the stock. No catalyst in the near term for him to buy; another deal would be a catalyst. In the meantime, doing a great job operating the business.

He's just a bit cautious in general about the consumer as a group relative to the rest of the market. He owns DOL and Loblaw, but that's it.

Hasn't performed well recently, investors not sure what to make of persistent attempts to buy Seven & I. Investor worries about amount of debt that would be needed to complete the purchase. Pretty high quality. Good time to look at it, as valuation has contracted. He's looking at it.

One of the fantastic Canadian compounders over time. But it will also go through periods where it can go sideways. High rate of return core business, and they're going to take FCF and possibly leverage and get even more of these businesses around the world. Seven & I deal would be great for synergies; if not, also great because they'd just buy their stock back.

Market doesn't know what to do because of all the uncertainty. Consolidating at a long-term moving average. Relatively inexpensive to historical levels. Waiting for the catalyst, but the catalyst isn't happening now. Mild consumer recession in US depending on income level, so its numbers are a bit weak right now. It'll get through this in 1-2 years, still one of his core Canadian holdings.

Seven & I negotiations are a big overhang. If deal goes through, anti-competition reviews will be required. Plus, would likely need to issue equity to fund it. Integration risk. To conserve cash, company's stopped buying back stock until this gets resolved. US operations are seeing softer traffic, with lower-income consumers spending less.

Low-growth area, so they've grown by acquisition. But now that they're so big, there's nothing left for them to buy. Trades at a discount, but lots of uncertainty on the name.

ATD has a lot of available firepower, and has indicated there are still 'lots' of acquisition opportunities if 7/11 fails. It does get harder to grow as the company gets bigger, but we do not think its M&A run is over yet. We would be comfortable buying this stock if one has a 5-year timeframe. Management has proven itself over and over. 
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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.