.bodytext {float: left; } .floatimg-left-hort { float:left; margin-top:10px; margin-right: 10px; width:300px; clear:left;} .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 12px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 12px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 12px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} tr.d0 td { background-color: #ccccff; color: black; }
Dear Mr. Berko:

Dear G.H.:

I called the chief financial officer of Winn-Dixie Stores Inc. (WINN-$17.55) twice, and neither he nor his office has returned my calls. I don’t like to dial WINN because sometimes you gotta wait 10 to a dozen rings till someone hears the phone and answers it. Kinda makes me wonder if WINN is going into bankruptcy again.

But I called WINN four times in three days, leaving messages explaining the purpose of my call. Nobody got back to me! I figured I’d try one more time, and if I couldn’t talk with a human I was going to have my two of my bent-nose friends make a personal appearance.

Well — Surprise! Surprise! — a cheerful operator picked up on the first ring, and I almost fell on the floor. After a short detour and delay, Eric Harris (investor relations) returned my call, nicely telling me that those bonds aren’t worth a pail of rusty nails. Sorry about that. However, Harris said you received 740 shares of WINN stock in place of your bonds. I called him back an hour later for a stock issue date, but he wouldn’t come to the phone — probably busy playing Wii in the board room with Chief Executive Officer Pete Lynch and Chief Financial Officer Ben Nussbaum. That’s the best answer I can give you.

Now you’ve already owned the stock and probably sold it — check your statements between December 2006 and August 2007 — but you might want to own it again. The Motley Fool recently recommended WINN at $19.50, and WINN is off about two points since their recommendation. I think Messrs Motley and Fool are pretty good at what they do, and because WINN is a bit lower, it’s certainly a better buy at $17.50 than $19.50.

WINN was forced into bankruptcy in 2006 by an ignominious executive team and a subnormal board of directors, all of whom need schematics and a diagram to turn off a light switch. But WINN was born again in November of that year with 54 million new shares that began trading at $13.50. New management closed unprofitable locations, sold marginal stores, reformatted inventory and commenced a store-remodeling program. As of last summer, WINN owned 520 stores in Florida, Mississippi, Alabama, Georgia and Louisiana with 401 pharmacies and 60 liquor stores — which are always profitable — meager debt and lots of brand-spanking-new shares.

Last year WINN sold $7.2 billion worth of cereals, soaps, sodas and soups, plus bananas, beans, butter and bread, producing a net income of $329 million or a diluted net income of $4.50 a share. WINN ended 2007 with a book value of $14 per share, cash of $4 a share and an impressive net profit margin of 4.5 percent. Wow!

But with WINN’s ignominious descent during the past five years, I feel badly for the very lovely and gracious Florence Davis, whose husband (J.E. Davis) founded Winn-Dixie 75 years ago. In 1992 she proudly sent me J.E.’s Winn-Dixie biography with a kind note of very personal comments. She’d be 100 years old today.

However, I’m a bit winky about WINN’s stock price, which continues to decline and rides well below its 50- and 200-day moving averages, both of which are moving lower. According to Yahoo (their financial site needs loads of help), WINN trades at 4.5 times earnings and $3.50 above book value, which may be compelling and attractive numbers.

But I’m flummoxed by WINN’s market behavior. The shares trade at about two-thirds the book value of its competitors. Net profit margins are superb, but WINN seems to be in a free fall, imploding from a high of $32 in June of 2007. Yet Lehman, Friedman Billings, HSBC Securities and the Motley Fool still rate WINN as a “buy.”

Here’s what I’d do: Rather than buy 500 shares, purchase 300 and wait. If it continues to fall lower, I’d drop the stock like a hot rock. But if it moves beyond its 50-day moving average, purchase 200 more shares.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@adelphia.net.© Copley News Service