The presence of Engaged Capital should improve accountability and encourage management to seek stockholder-friendly outcomes.
It's poised to capitalize on trends favoring premium and natural pet foods, and it's undervalued.
We do not think sluggish quarterly results indicate lower long-term potential for the narrow-moat company.
The moats of the large aftermarket retailers should be able to keep online competition at bay.
Activist investor Jana Partners has built a 9% stake in the narrow-moat company and will press management to make operational improvements and investigate a sale.
Although growth remains sluggish, opportunities in consumer defensive stocks are still available for selective investors.
While the industrywide price compression erodes the wide-moat company's price advantage against traditional retailers in the short term, we do not anticipate a long-term change to the company’s competitive standing.
The narrow-moat firm will be threatened by its reliance on the center of the grocery store, which has seen rising competition.