Discussing what’s behind the stock market rally and where PetSmart is going, with Bob Olstein, Olstein Capital Management CEO.
caller: well, we’re in a mergers and acquisitions. i don’t think the story’s in the market anymore, and, you know, basically, the values are up there, but underneath, everybody’s in the social media, the shopping stocks, petsmarts, bed bath, low cash yields, few people doing that. five stocks in the last two weeks taken out of the portfolio or expressions of interest. petsmart, live on closing bell said private equity is interested, a company doing five bucks a share, free cash flow, hidden di appreciation with another 50 cents, and we think they are on the way to seven, and if it’s taken out, 85, 90, one of the largest positions. underneath the market rs this is a free cash flow yield merger and acquisition market, and that’s where the money will be made. right, well, obviously, you’re talking about something that i like to focus on, as you well know, and mna is robust and will continue to be at least in conversations i have. let’s get to petsmart in particular. you mentioned, it bob, a larger position. and filed with a 9.9% stake, and they own a lot of the stock wanting to talk to management and conceivabler pursue a sale. come back at me with the numbers and why it could go at the current price, and people shorted the stock as well, which may benefit the stock move up today as they cover. caller: i cannot understand why anybody would be short a stock like this. 450 in earnings, another hidden 50 cents in free cash flow because of the excess depreciation no longer spending cap. they do not grow 8% anymore, but growing at 2%. they are on the way to $6, and everyone says the internet puts them out with dog food. they don’t understand there’s a wide array of services like grooming, day camps, vet care, and adoption. that brings people in there. it’s only giving free cash flow at 17 mobile. shorts cover quickly, the stock’s going higher, and i believe it will be taken out, and it’s a good move. excellent move.Bob Olstein