Closing the Door on Dorman

Dorman Products, Inc.is a supplier of auto and truck replacement parts and service line products primarily for the automotive aftermarket. The company markets approximately 133,000 different parts, has 1400 employees and maintains its headquarters in Philadelphia.

[PostStockWidget stock_valuation="" pricetype="live" manual_date="Dec. 21, 2012, 2:04pm GMT" symbolcodes="'DORM'" symbolprices="50" div_align="right"]

• We bought DORM in July 2014 at $43.23. We always have mixed feelings about selling great companies too early, but our results are the best proof that when a stock is at the high end of the valuation range, it is best to invest elsewhere.

• Significantly, since we initiated our investment the earnings estimates have fallen by 8% and 20% for 2015 and 2016 respectively. This decline in future earnings growth estimates reinforces our conviction to stick to the Purple Chips model and sell at this High Valuation target.

• HIGH VALUATION IN DORMAN PRODUCTS AT $USD 49.80 (DORM-US) HALF POSITION

• TOTAL RETURN: 15.2%

PURPLE CHIPS TARGET: $50.00 POSITION SIZE: HALF (2.5%) P/E: 19.2X DIV: Nil MKT CAP: $1.8B Cash:$48M RETURN ON CAPITAL: 31.5% EARNINGS YIELD: 8.1% 5 YR EPS Growth rate*:23.7% P/E/G Ratio: 0.81X EPS: $2.59 2016 EST.: $2.84 2017 EST.: $3.24

*Blended growth rate= 2/3 historical (5yrs), 1/3 forward.