Against this backdrop of overall positive results, we acknowledge that Qurate Retail (QRTEA, Financial) (Q3: -17%, YTD: -47%) has been a notable detractor in 2019. The QxH segment’s (combined QVC US and HSN) second quarter sales were down less than 2% (a modest improvement compared to the first quarter sales decline) and profit margins remained healthy. Nevertheless, investors have taken a myopic view of retailers, broadly categorizing the industry into the “haves” (e.g., Amazon.com) and the “have-nots” (e.g., nearly everyone else). We believe this “have not” mentality drastically undervalues Qurate, and its shares represent an attractive value. That said, we are clear-eyed about the challenges facing retailers and factor that uncertainty into our portfolio weighting decisions.
From Wallace Weitz (Trades, Portfolio)'s Hickory Fund third-quarter 2019 commentary.
