Guest Bronco Posted February 15, 2010 Share Posted February 15, 2010 This is kind of random - but I always thought that Nathan's could benefit from the SNS / Berkshire Hathaway / capital allocation model. They have tons of cash, generate more cash with little overhead, but do nothing with the capital but buy back stock. Anyone have any thoughts? Link to comment Share on other sites More sharing options...
Parsad Posted February 15, 2010 Share Posted February 15, 2010 It would be tough as Lorber and crew control about 28% of the shares. They are in good shape, making money and doing a pretty decent job. Could they do better? Yes, but I don't think there would be enough disgruntled shareholders to help an outsider win control. In Steak'n Shake's case, the company was doing a God-awful job and Gilman's board only controlled 5% of the stock. On average you get about 70-80% turnout for votes, so they control 28% (or roughly 35-40% of the possible votes) from the get go. Could someone buy or garner 51% of the potential votes? Possible, but probably not worth the costs of the proxy fight. If the SEC does change the rules for outside nominees to be included in the company's proxy circular, then you will see more battles, but at $150-400K+ per proxy fight, it's too expensive to wage a war without a high probability of victory. There are much easier companies to go after. Cheers! Link to comment Share on other sites More sharing options...
Guest Bronco Posted February 16, 2010 Share Posted February 16, 2010 Parsad - I agree with all your points, but maybe I should have been more clear. I was hopeful current management would adopt a capital allocation model. It appears to be the perfect company to do so, with few cap-ex needs. However, as you mentioned, the management is not leaving and the seem to enjoy investing profits back in NATH shares which aren't really undervalued. Link to comment Share on other sites More sharing options...
Rabbitisrich Posted February 16, 2010 Share Posted February 16, 2010 That model is not for everybody. All those instances you hear about CEOs Gone Wild are iterations of the same theme: most people don't trace the limits of their competence. I would love for Gorber and co. teach Leslie Moonves about the joys of not crapping on money. Link to comment Share on other sites More sharing options...
Guest Bronco Posted February 16, 2010 Share Posted February 16, 2010 Rabbit ... I agree the model is not for everyone. In which case I am a fan of the good old fashioned dividend. If you can't reinvest it at a decent rate of return - give it to the shareholders (who actually are supposed to be the owners). Link to comment Share on other sites More sharing options...
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