Buying A Wonderful Business At A Cheaper Price

I was wrong not to buy this business last year. Now it's cheaper and I will sell Floor & Decor to fund this purchase.

Hi, I am Trung. I deep-dive into market leaders that passed my sleep-well checklist. I follow up on their performance with my Thesis Tracker updates, and when the right price comes, I buy them for the Sleep Well Portfolio, which I am building for my daughters to redeem in 2037. I disclose my reasoning for all BUY and SELL (ideally never). Access all content here.

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Hi, sleep well, investors,

We have a 10/10 success rate. Today's purchase and sale are taken under some uncertainties, but I see fundamental changes and a price and value dislocation; I am optimistic it will pay off once the dust settles.

I will buy a wonderful business that has generated free cash flow by 41% CAGR in the past ten years while the stock price has increased by 43% CAGR. It was profitable from Day 1 and has a twin-engine of growth (organic and inorganic), a sticky customer base that will still provide a long-run way for growth. So, the business structure is there to keep growing and delivering top-class products and value to shareholders.

To fund the purchase, I’ll be selling Floor and Decor, a position I purchased in October 2023, which is up 13%. The reason isn’t that Floor and Decor has had a difficult 2023 and 2024 due to the slow existing house sale market. What made me decide to sell the business was the change of words in the FY2024 10-K.

Floor and Decor had subtly changed a paragraph. Combined with my previous business update, I am questioning its long-term ability to meet its 2032 targets.