Minding the Gap

When the good times never stay
And the cheap thrills always seem to fade away
When will we fall
When will we fall down
--Toad the Wet Sprocket

Took a small starter position in Gap (GPS). We laid out a fundamental case for GPS last fall. Since then the shares have had their ups and downs--most recently down as fears grow about slowing mall traffic.

Enterprise value now rests in $7-8 billion range, fairly well aligned with what I believe is long term free cash generating potential of this operation. Balance sheet cash:debt still about even. Dividend yield approaching 5%.

My sense is that the stock will trade lower still. Five year support rests at about $15. Not going wild here. But plan to nibble some more if price moves in my favor (lower).

position in GPS