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The Brick Group - BRK.UN


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I bought the stock at $2.45 or so for the yield, it promptly (6 weeks later) dropped to $1.25 after the dividend was suspended so I exercised some discipline and sold at a 50% loss due to the fact that the reasons for my purchase no longer existed (monthly distribution yield)).  50% drop is a bitter pill but it looks like I saved myself another 50% drop from that point judging by recent prices.


As it happens, I was in the Brick last night in Barrie Ontario (a fast growing new area) and you could hear the crickets and see the tumbleweeds despite some great pricing!!


It may be a bit premature for building a position- just my gut opinion.  I know FFH owns it and all that, but it's a fairly miniscule position relatively speaking.


If you want to bet on furniture, take a look at Leon's as well - they have a better balance sheet.


Remember - lethargy bordering on sloth!!

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The debentures look reasonable, but there might be an appealing discount available in future.

The units are speculative, but trading around a core holding of debentures might make money.

The warrants are too new, likely will be sold down in next six months.  Thereafter ... maybe.

As options on future equity of the company, the units are more realistic as de-facto options.

The free cash flow from company is likely to go entirely to debentures not the units though.


Re "turn" in economy, I'm still expecting further slowdown, impacting particularly on furniture

and appliance retailing.  De-leveraging has not yet run its course.  Sales per square foot may

be a measure that would give an indication.  Perhaps trade pubs in furniture & applicance retail

would give some insight.


There are some bargains, opportunities to get on board even prior to the turn, but my guess

is that good prospects will have already eliminated or soon will eliminate their debt/leverage,

will have brought their operating ratios back into line (inventory/sales, sales/employee, etc),

and will have their fixed costs adequately covered.  Those which are not yet robustized will

likely see further selldowns in their security prices, hence not yet time for outsider to buy in.

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EDMONTON - Former Forzani Group CEO Bill Gregson was appointed Friday as president and chief executive officer of Brick Group Income Fund (TSX:BRK.UN), replacing Kim Yost as head of one of Canada's largest furniture retailers.

The appointment of Gregson, a chartered accountant who most recently has been a consultant for Reebok United States after 10 years with Calgary-based Forzani (TSX:FGL), is effective immediately.

A Brick statement described Gregson as a "seasoned executive with extensive operational experience in the retail industry."

"He has an outstanding track record of both protecting and creating value and ... the ideal person to address the challenges" facing The Brick, said board chairman Ron Barbaro.

No reason was given for the departure of Yost. However, he has been at the helm while the Brick first reduced, then eliminated completely, regular distributions to its unitholders.

The fund reported had a $29.3-million loss in the January-March quarter, which included a $25-million writedown of intangible assets.

The Brick also announced Friday that Paul Rivett, chief legal officer for Fairfax Financial Holdings, a major unitholder of The Brick, has joined The Brick's board.

The Brick Group is one of Canada's largest volume retailers of household furniture, appliances and home electronics. It operates 230 stores in Canada under four banners: The Brick, United Furniture Warehouse, The Brick Superstore and The Brick Mattress Store.

Through its corporate sales division, the Brick Group also services the subdivision, condominium and high-rise builder market.

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