Contrarian Picks Fleming

Sep 18, 2002

Grocery wholesaler Fleming has been taking its hits recently on the business pages and in its share price, but that doesn’t scare off James Fraser, editor of the Ruminations of The Contrary Investor newsletter.

Mr. Fraser believes that Fleming can be successful in the face of its many well-documented challenges. “Financial results have shown some promise. Operating margins have trended up for four straight quarters. Adding new business such as Target to existing facilities should help continue the trend. Expected free cash flow of over $280 million over the next 18 months will be used to pay down debt.”

Moderator’s Comment: Contrary to the opinion of some,
are Fleming’s prospects generally bright? Why or why not?

From our perspective, Fleming’s biggest challenge going
forward will be to attract and keep talent.

The company’s acquisition of Core-Mark in June brought
with it many talented managers that should help.

We’d be less than honest, however, if we didn’t admit
being concerned over the announcement last week that Tom Zatina had resigned.
Mr. Zatina is one of the most respected executives in the industry and his exit
is both a practical and public relations hit against Fleming. At this time,
there has still not been a reason given for Mr. Zatina’s departure. [George
Anderson – Moderator


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