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FROM THE DESK OF IRWIN MICHAEL

ABC Funds Special Commentary: Rona Inc.

February 15, 2013


On February 6th, we liquidated our remaining common shares of Rona Inc, thereby locking in a profit for our ABC Funds. While the company is undertaking a strategic review of its diverse operations, we believe there are a number of headwinds facing Rona, resulting in near-term uncertainty for the company. These include: 1) the ongoing challenging macro environment for renovation spending; 2) the political reality presenting considerable interference with Rona’s value-maximizing opportunities via a potential takeover; and 3) expected one-time charges in connection with its current restructuring initiatives. While we acknowledge that the recent appointment of Robert Chevrier, an experienced industry professional, as Executive Chairman should provide a greater long-term focus on corporate profitability, we believed it was prudent to exit our position and use the proceeds to invest in other undervalued securities.

IAM Initials
Irwin A. Michael, CFA

 
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