SELLING HALF POSITION IN AUTOZONE AT $639.00 (AZO-US)

Autozone, Inc. is a retailer and distributor of automotive parts and accessories in the United States with 5,814 locations in the United States, Puerto Rico, Mexico and Brazil. The Company's other operating segments include ALLDATA, which produces, sells and maintains diagnostic and repair information software used in the automotive repair industry; E-commerce, which includes direct sales to customers through www.autozone.com, and AutoAnything, which includes direct sales to customers through www.autoanything.com.

JUSTIFICATION

We bought Autozone in March of 2017 at $713.75. Since then, it declined on the threat of competition from Amazon. Over the same time period, earnings estimates have also fallen (2018 was $50.26, now $46.96) and the valuation range has shifted from a PE of 14X to 19X to the current range of 12X to 15X earnings. We will stand aside until we see evidence that both valuation and earnings have stabilized.