Emil Lee: Can you describe your thought process leading up to your purchase of Tempur-Pedic?
Joe Feshbach: I got involved in September 2005, after Tempur issued a disappointing forecast for the third quarter of that year. The bears were convinced that Tempur had a business with low barriers to entry that [competitors] Sealy (NYSE: ZZ) and Simmons would be able to threaten.
My thesis, in contrast to the bear case, was that Tempur was the leader in specialty bedding, that it was already a leading global brand, and that displacing it would be a lot harder than conventional wisdom [believed at the time].
Our lowest cost basis on the stock was $9.70. Our core position was built around an average of $11.