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Stock Research and Home Depot are in the news again. This is a result of the firing of the CEO, Bob Nardelli, and what a story it is. You have to step back for a moment and think about any company’s history that you are doing stock research on. You must have an understanding of the company’s history. As a professional investor, when I think of a company’s history, I am more concerned about corporate culture than just about anything else. History shows that a great corporate culture will produce great results. The opposite is true as well.

I was involved with Home Depot in the beginning. I watched and almost participated in the original private placement for the company over 25 years ago. That’s another $100 million I am never going to have. What made this company really go, were the two founders, Bernie Marcus and Arthur Blanc. They created an entrepreneurial store atmosphere where a lot of what went on rested in the hands of the store manager.

For more than 20 years, the company had a spectacular run. It was one of the greatest stock market performances in modern history. It all came apart during the stock market bubble of 2000. Yes, the stock price was inflated, and the company brought in a new CEO Bob Nardelli, who was in the running to become CEO of General Electric. He was passed over by Jack Welch and the Board, and Jeff Immelt, won the slot to run GE.

As is the case with all top guys at GE when they are passed over, they leave, sometimes for greener pastures. Nardelli was recruited to run Home Depot, and successfully brought GE’s template for how to grow a business over to Home Depot. That was his first problem, his second was execution. There is no question that Nardelli was successful in creating great numbers for Home Depot. He failed everywhere else.

When he started, the sales were about $46 billion. By the end of 2005, they were approaching $82 billion. During his tenure however, the stock price is overall down about 6% or so, while profits doubled. At the same time, its principal rival Lowe’s Companies has seen its stock more than triple.

If it ain’t BROKE – Don’t FIX IT?

Nardelli was a self-made victim. It’s one thing to come into an ailing company, and turn it around using modern management techniques. It’s another thing to come into one of the best stock market performers in history, and start changing things that don’t need changing. The result is the self-destruction of a seasoned corporate manager – Robert Nardelli. Don’t feel too bad for him, he walked out with a very rich $200 million severance package.

He never got it though. He never figured it out. He’s sitting in his home right now sipping a martini, licking his chops, and living in a fantasy world about what went wrong at Home Depot.

Here’s the REAL DEAL

Nardelli went after the wrong issues at Home Depot. Yes, the company may have been a bit “shoot by the hip” in terms of giving those 2000 plus store managers authority to run the show – BUT IT WORKED, and it worked well for decades. The imperial CEO tried to wring them in – GE style, and the new template just wouldn’t work. General Electric is the army of the corporate world, and don’t kid yourself, the army wins the wars.

Home Depot was more along the lines of Special Forces – a lot of authority went to the guy on the floor running the store. After all, these are the guys that deal with the customers on a day to day basis. The customer buying a screwdriver, or the contractor buying drywall never got to see Nardelli. They only saw his procedures in place, and the procedures no longer worked.

Take the handoff for example. For years if you walked into Home Depot and couldn’t find what you were looking for, you could ask any employee. Whoever you asked, would then walk you over to the aisle where the item was located. The employee would then look for the worker in charge of that aisle, and say, this gentleman would like a screwdriver. The second employee would then show you where they were located, even help you select one. The key is that the first employee would hand you off to the second employee personally.

Nardelli destroyed this practice, and with it – that flair that made Home Depot different than everybody else went down the tubes. There’s something about a customer business that’s radically different than General Electric’s business plan which is to engage with other companies (manufacturing) rather than people. Nardelli didn’t get it, and the stock went to hell.

Have you ever noticed that when you walk into a Wal-Mart, you can pick up any item and than find a bar code scanner in the store that will tell you the price of the item? You would think that Nardelli would have installed similar bar code readers in his stores during the five years that he ran the company. Nope, forget about it. Half the items in Home Depot have no price sign attached, or nearby. The customer is completely at a loss to determine what he is paying for an item.

Abusing Shareholders too

Nardelli’s ultimate downfall came after he started to abuse Home Depot’s fabulous shareholder base. On May 28th of this year, Nardelli ran the annual shareholder’s meeting in Wilmington Delaware, absent the Board of Directors. He told them not to show up. He only allowed the meeting to go 30 minutes. There was a digital clock at the meeting to time the questions. You had 60 seconds and then boom, the microphone went dead automatically. They probably put a sadist in charge of the cut off switch.

In the final analysis, this brilliant GE trained executive blew up his own career. He alienated the shareholders, the employees, and Wall Street too. He would appear antagonistic when I would attend the analyst conference calls when he would be quizzed about same store numbers. He couldn’t understand our infatuation with comparables.

Right now, he is probably realizing that we weren’t the ones operating on another planet. Nevertheless, he does have that $200 million severance package to ease his pain. It’s not the end for him however. I understand Congressman Barney Frank is about to launch Congressional hearings, and Nardelli will be brought before the Congress to explain the justification for the CEO pay packages today. Nardelli will have to bring his own lawyer this time, on his dime. There won’t be a single one of the 330,000 Home Depot employees there to support him either.

Goodbye and Good Luck

I Googled and searched forums for ages, and still didn’t have all the answers for completing the task that awaited me. I purchased a manufactured home recently, but almost didn’t, mainly because of those ugly seams they run up and down the walls of the home.

Still, I understood this to be part of the reason that manufactured homes are so cheap. It makes sense: If all you have to do is staple seams over gaps in the sheetrock, then your labor costs will be drastically lower. It is also highly probable that the walls will look like garbage (No offense to those who own trailers, but c’mon, the walls don’t nearly compare to a stick built home).

Regardless of the situation, you will be the beneficiary of my vast experience in actually doing the work, on some 3-7 odd rooms. I really wish that this method allowed pictures, but hey, nothing’s perfect.

First, you need to rip off the seams. I recommend a spackling knife for this endeavor. Insert the spackling knife into the joint, then use the handle as a pry bar, and pull it out towards you. This will loosen the hold that the nails have on the seam. Repeat until nearly half of the seam has been dislodged. After this, you should be able to pull the rest of it off. Pull the seam from bottom to top, and watch out for any nails still lodged in the seam. I recommend immediate disposal of the offending material.

Great. Now you should be looking at two sheets of trailer board. I would call it sheetrock, but it technically is nothing of the sort. It is less thick, and also has vinyl applied to the surface. The nail heads/staples will still be visible, so you will need to pound them down into the board, using a hammer. Run the spackling knife over the area, to make sure that the nails will not catch it, and keep it from doing its work.

Now, you should be staring at a gap roughly 1/8th – 1/4 of an inch in width. There are two options that you can take in addressing this gap:

1. You can go with the traditional method of laying down sheetrock mud, paper tape, and then another layer of mud, or…

2. You can get vinyl mesh tape, and use it to span the gap. Afterwards, you can spread vinyl spackling compound over the tape to finish the seam.

For the greatest simplicity, we will be using the vinyl tape method here. This stuff comes 300 feet to a roll at your local home improvement store, and will most likely be available in the paint aisle of your home improvement store. It will be yellow, and layed out in grid. It’s basically yellow tape with a large grid of squares in it. The folks at your home improvement store will know what to give you, should you not have an understanding of what I am talking about.

Once you have the tape, run it it from the top of the seam, all the way to the bottom, making sure there is around 50% of the tape on either side of the seam. Then, load up a spackling/putty knife with good amount of vinyl spackle. The next step will take a bit of practice. Using steady pressure, run the putty knife from the top, to the bottom of the seam. Make sure the spackle is thin enough that you can still see the yellow color of the tape, and thick enough to fill in the grids and the seams. It may take up to three passes of the knife to get it to this thickness. Just be patient.

If you have a deep gap, that is larger than 1/4 of an inch, fill the gap with spackle, then place vinyl tape over that, with another layer of spackle following. This is highly necessary to prevent bubbling of the spackle, and to keep a sinkhole from developing in the spackle.

Now, let the compound dry, according to the directions on the spackle bucket. Yes, you need a spackle *bucket*, not one of those wimpy 8 oz. containers. Otherwise, you will need to make runs to Home Depot more frequently than you expected.

When things are fully dry, start your sanding. I recommend starting with 120 grit sandpaper, and by all means, buy a sanding block. Do not us a power sander for this task, as it will take far too much off the spackle off, and fray the vinyl tape. I know this from experience. Try to make the a gradual transition, leaving just enough dried spackle to cover the gap. The spackle should be smooth to the touch, and not be so heavy that you can distinguish where the wall starts and the seam begins. It takes a little practice to get things right, so take your time.

A note about corners: If you attempt a confrontation of the corners where the boards meet, you will need 2 specialized tools. People who deal with sheetrock on a regular basis have an “inner” and “outer” corner tool, to help them deal with the problems that they provide. They’re basically right angles on a handle. If my experience is indicative of what yours will be, these tools will be located near the sheetrock and lumber, rather than the paint/spackle/mudding area. These tools will be more than worth the $8 USD you’ll spend to acquire them. Same rules apply for the corners as the straight seams.

After you get done, apply 2 coats or so of primer to the wall to seal things up. After the first coat dries, check for any place where you can see th grid pattern of the tape. Apply a thin coat of spackle in the tiny holes, let it dry for an hour or so, and then apply the second coat of primer. For what it is worth, I prefer Bullseye 1-2-3 to Kilz, as it seems to cover better. Bullseye is more expensive, but you can occasionally get by with a single coat. Kilz is far more watery, and applies white, rather than Bullseye, which applies grayish.

A word about wallpaper: Resist the urge to strip the wallpaper from your manufactured home. Your wallpaper and wallboard were put together in one piece. Should you attempt to strip the wallpaper off, you may well take half your wallboard off with it. No amount of spackle will save you at that point. Prime it, and leave it alone. It will take the paint perfectly, and you won’t have to pay a professional to come in and fix your horrible mistake.

Put on your favorite color of paint, and then dare your friends to say you live in a trailer. They’ll still say it, but you won’t care, as the improvement will be so drastic. I have spent less than $150 on supplies for the spackling of my entire house(excluding paint) and the difference is incredible.

As a closing thought, please hear my plea. Do not cheap out the paint. Buy Benjamin Moore. It’s pricey, but it covers extraordinarily well, and lasts a long time. I’ve talked to painters, read their comments on forums and discussion boards, and checked things out for myself. Don’t buy paint from Lowe’s or Home Depot. Get it direct from Ben Moore, and you will be happy for many years to come.

Now, get ready, it’s more work than you think, but also more rewarding. I wish you nothing but success, and if you fail…well, I’ll have to assume you didn’t read the directions well enough…;).

Good luck.

What do you think of when you hear the word recession? Ruin? Breadlines? Layoffs? Used cars? Repossessed homes? A mountain of Home Depot coupons? Everyone fears a recession, but believe it or not, a recession does not mean the end of the world as you know it. In fact, economists view a recession as a normal part of the naturally ebbing and flowing U.S economy. In the same way bulls become bears and hot markets turn cool, capitalist economies occasionally slow down, pause, and take the time to breathe.

The best way to deal with recession? Smile, hoist half-filled cups of regular unleaded, and think of the ten good things about the looming bad times. Here are five reasons you just might grow to love a recession.

1. There are shorter lines at the pump.

When the economy does well, Americans become gas hogs, furiously jockeying for their turn at the pumps. With recession pushing gas prices to an all-time high, trips to the station will become the perfect avenues for a little R and R. While you fill up, you can check the oil, enjoy a power nap, munch on chips while organizing your Home Depot coupons – yes, you can do all these before you can catch a glimpse of the next customer from your rearview mirror.

2. You can spend more time with the family.

Recreation is costly, and becomes even more so during recessions. What’s the average American to do to cope with the hard times? Why, stay at home of course! You’ll have to toss out fast-food and overpriced restaurant meals out the window and say hello to leisurely home dinners prepared with the family’s help. You can put the husband to work cutting out Home Depot coupons while the kids wash the vegetables or set the table.

3. You exercise – whether you like it or not.

As gas prices rocket past the ceiling, expect alternative modes of transportation to gain more appeal. You’ll be itching to hoof it to the bus stop, walk to the station, or ride a bike – all in an effort to save dollars. Solitary walks can be quite lonely, however, so keep yourself entertained by going over the Home Depot coupons you’ve amassed. Who knows? You might feel like dropping by the store for power tools on your way to work.

4. You become motivated to start your own business.

Disney and Hewlett-Packard have one thing in common: both were built from scratch during economic downturns. Clearly, recession is a good time to start your own business and become your own boss. During recession, rent is cheap, competition is few and far between, and wages are down because most people have gotten laid off and have nothing better to do than stay home and accumulate Home Depot coupons.

5. You get more coupons.

Companies offer more coupons, Home Depot coupons for one, during recessions. Restaurants fill their tables during hard times through buy-one, get-one offers. With Home Depot coupons and grocery discounts, you can enjoy more for less. Not a bad stimulus to keep the hard-up going, not bad at all.

Recession’s scary, but if you face it with courage and good humor, the hard times won’t seem so bad. Think of it this way: poverty purifies the soul (or so monks would have you believe).