Post Holdings, Inc. (NYSE:POST)

CAPS Rating: 5 out of 5

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Member Avatar benyboy (< 20) Submitted: 9/6/2014 3:57:20 PM : Outperform Start Price: $35.28 POST Score: +16.64

fool news letter

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Member Avatar TMFWalter (62.50) Submitted: 8/8/2014 11:15:55 AM : Outperform Start Price: $36.43 POST Score: +7.94

Outsider CEO and Mr. Market is offering us a 17% sale.

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Member Avatar TMFNato (98.64) Submitted: 8/8/2014 11:14:38 AM : Outperform Start Price: $36.43 POST Score: +7.94

Having read up on new CEO Bill Stiritz, I believe in his ability to run a profitable, efficient company that makes smart buys destined to pay off. Through acquisitions, Post seems to be building a diversified portfolio of staple foods that'll help drive solid long-term results.

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Member Avatar hba24 (95.86) Submitted: 5/28/2014 10:19:05 AM : Outperform Start Price: $49.84 POST Score: -23.76

New CEO is taking Post in some new and very intriguing directions. Not just a cereal company anymore--in fact cereal accounts for only about half of sales, and that share continues to shrink (was at 80% less than a year ago). High margins and strong free cash flow growth should continue.

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Member Avatar AlexeiVronsky (97.07) Submitted: 4/24/2014 10:01:01 PM : Outperform Start Price: $59.75 POST Score: -39.97

Bought for management

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Member Avatar jdbow (55.60) Submitted: 4/17/2014 10:02:13 PM : Outperform Start Price: $54.15 POST Score: -33.37

This holding company is a little over 2 years old and
the CEO has a track record of rewarding share holders.
It has recently borrowed a lot of money but holds it in current assets.
Some risk but it could turn into a big winner.

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Member Avatar TMFFlygal (99.45) Submitted: 3/26/2014 1:49:30 PM : Outperform Start Price: $55.24 POST Score: -35.27

Bill Stiritz, a proven Outsider CEO, know how to allocate capital.

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Member Avatar TMFRazorback (95.07) Submitted: 3/14/2014 2:59:56 PM : Outperform Start Price: $59.38 POST Score: -39.39

"Post Holdings competes for your capital allocation. To earn it we must deliver risk adjusted returns commensurate with your assessment of risk and your alternatives. Perhaps uniquely, we view Post as a hybrid of a traditional public company and a private equity fund. We use many of the same tools as a private equity company – relatively higher leverage, investment analysis and adaptive management. We also view our portfolio as dynamic, reacting to opportunities as they develop. However, unlike most private equity firms, we also provide Centers of Excellence to create competitive advantages for our operating companies. And we do this in the public forum allowing our investors greater transparency and, most importantly, the ability to act on their own accord."

-- CEO Bill Stiritz, 2013 shareholder letter

He is repeating the same formula that worked marvelously for Ralston Purina shareholders in the 1980's and 1990's. POST is a recent spinoff from Ralcorp. There main business has been the Post cereal business (as the "Post" name implies). The cereal business has been in decline in recent years, but Stiritz is not interested in just the cereal business. After becoming CEO, they added "Holdings" to the company title. That says it all. The gameplan for Stiritz is not any different than what worked at Ralston Purina: improve market share and margins at Post Foods through more effective marketing and better efficiency of capital deployment, acquire other valuable packaged brands at single-digit multiples of cash flow, and buyback POST stock when it's cheap.

Stiritz is an expert at consumer marketing. But the real story here is an official William Thorndike Outsider using excess cash and borrowing capacity to acquire other businesses at less than 10 times cash flow. Share buybacks are also part of his toolbox when POST trades at low multiples of cash flow.

Based on the company's guidance for 2014 adjusted EBITDA, I estimate POST will generate about $170 million in free cash flow this year, which excludes any further acquisitions and also doesn't count the recent acquisition of PowerBar and Musashi brands. That puts the stock price today trading for 13 times free cash flow. For an Outsider CEO generating 15%-20% returns, that is pretty attractive.

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Member Avatar TMFBuck (74.62) Submitted: 1/21/2014 11:46:20 PM : Outperform Start Price: $53.40 POST Score: -33.45

Good brands, strong cash-flow and good capital allocation chops. Who could vote against Fruity Pebbles?

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Member Avatar kankemike (54.68) Submitted: 6/16/2013 11:50:23 PM : Outperform Start Price: $45.86 POST Score: -34.27

POTENTIAL BRK.B BUY?

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