No. of Recommendations: 9
I usually enjoy rational walk's analyses, but I didn't find his DG one convincing. I'd have thought that a potential long-term macro trend, like inflation, is harder for DG to handle than fixing a management issue where prompt personnel action can address an internal isolated problem. DG generates profit from a target customer base on the lower rungs of the income ladder, so macro trends like inflation can make it very hard for DG to squeeze profit out of customers who just don't have the money.
I view Buffet's quote, "I try to buy stock in businesses that are so wonderful that an idiot can run them, because sooner or later one will", in the same vein as Buffet expressing that his favorite hold time is "forever". Perhaps a distillation for the masses of his ideas/preferences/suggestions, but Buffet certainly does sell stock positions, and sometimes not long after entering them, presumably having realized that the initial decision was a mistake. In the same vein, personnel decisions, such as a new CEO, can be a mistake and when that's recognized, you fix it. Buffet quotes are generally nice, but don't constitute a cogent, specific, argument. I don't think that replacing a CEO means that the DG business model is necessarily fragile (it may be fragile, but not for that reason). It makes sense (to me) that the wrong man in the top job at the wrong time can screw things up, and if that happens then the BOD needs to fix it. I took a leap on DG awhile back with a Jan 2016 DITM call (points for the pun!). It's of course way down right now, but there's plenty of time, so I guess I'm a bull that gambles (image of a long horn bull in cowboy hat at a black jack table in Las Vegas).
