Greenberg: Bed Bath & Beyond Positioning for a Bid?

This article appeared at 2:00 p.m. EDT on RealMoney Sept. 7.

SAN DIEGO (RealMoney) -- Here's what you need to know. Ken Hackel of CT Capital in Alpine, N.J. is bullish on Bed Bath & Beyond (BBBY) .

I don't always agree with Ken (perhaps notably on Herbalife (HLF) ), and he's not always 100% right (who is?). But in my discussions with him over the years, he has been almost always more right than wrong in the names he and I have discussed.

And nobody -- and I do mean nobody -- knows how to analyze cash flow the way Hackel does. He authored the tome Security Valuation and Risk Analysis, which is a serious dive into analyzing companies with a focus on cash flow.

And with Bed Bath & Beyond, cash flow (and its quality) is a big part of his story.

From Hackel's private report on Bed Bath & Beyond, which he generously shared with me:

"It is not often we would recommend investment in a firm which is losing market share though they remain the dominant player in several categories; yet in the case and analysis of BBBY, I believe overall fears to be exaggerated, and when considering the firm's current valuation, makes it an excellent investment opportunity."

He goes on to say:

"Although the shares have, as of last month now underperformed the S&P 500 over the past five years, the firm has superior relative free cash flows and cost of capital. Even recognizing the firm's lead in several categories is being brutally challenged by the proliferation of online services, many of whom have cost and tax structure advantages, our analysis concludes the risks and consistency metrics make an investment in BBBY to be one which offers a superior return, especially relative to the general equity benchmarks."

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