OracleofCarolina Posted July 12, 2010 Author Share Posted July 12, 2010 http://nrn.com/article/red-robin-buyout-speculation-escalates Buyout rumblings Link to comment Share on other sites More sharing options...
Parsad Posted July 13, 2010 Share Posted July 13, 2010 As I mentioned in a previous post, the 13G does not preclude Sardar from making a tender offer. I know this is a company he likes, so I would not be surprised to see him make a tender offer. Cheers! Link to comment Share on other sites More sharing options...
wescobrk Posted July 13, 2010 Share Posted July 13, 2010 I read at the annual meeting he made an offer for a company with a market cap greater than $200 million but he was spurned. This is probably the company that spurned him. Once BH is trading at a high multiple to book value (when it was around $400 Sardar implied it was overvalued) he'll probably make another one but I doubt he'll do it with the stock undervalued. Also, he likes to hang on to his cash as evidenced in his 50% stock offer for Fremont even though the total cash outlay would have been less than $40 million. Finally, he still hasn't paid off Western's 14% debt. He made that offer for Fremont when the stock was cheap but it was such a small percentage of BH's market cap it would be a disaster if he made a stock tender offer with BH trading so low,especially after he spent over $20 million of his partners money in the last two weeks buying around $320 a share. Link to comment Share on other sites More sharing options...
ragnarisapirate Posted July 13, 2010 Share Posted July 13, 2010 I read at the annual meeting he made an offer for a company with a market cap greater than $200 million but he was spurned. This is probably the company that spurned him. Once BH is trading at a high multiple to book value (when it was around $400 Sardar implied it was overvalued) he'll probably make another one but I doubt he'll do it with the stock undervalued. Also, he likes to hang on to his cash as evidenced in his 50% stock offer for Fremont even though the total cash outlay would have been less than $40 million. Finally, he still hasn't paid off Western's 14% debt. He made that offer for Fremont when the stock was cheap but it was such a small percentage of BH's market cap it would be a disaster if he made a stock tender offer with BH trading so low,especially after he spent over $20 million of his partners money in the last two weeks buying around $320 a share. The company that turned down the offer was a mutual insurance company, that was selling off one of it's lines of business. While the exact period of time escapes me at the minute, he can't pay off the WEST debt for, what? 1 year after issuance? Link to comment Share on other sites More sharing options...
wescobrk Posted July 13, 2010 Share Posted July 13, 2010 Thanks Pirate for the correction. As for Western debt, he's made comments about flexibility cash affords, I doubt he'll pay off West for a couple of years. I guess we'll see. Also, it helps the performance of the Lion Fund (practically guaranteed 14%). Link to comment Share on other sites More sharing options...
benhacker Posted July 14, 2010 Share Posted July 14, 2010 I haven't looked at RR's financials recently, but one thing to note from a business perspective that I'm sure Sadar likes is that they have pretty good returns because they maintain decent mid-range/high prices for a burger-type joint, but they turn tables better than any casual chain I've ever seen. I eat there a fair amount, and I love it because it's easy to get good food and a drink and be out in 25 minutes. When you sit down if you want, you can order within 2 minutes and they do it in a way that doesn't feel pushy. This doesn't matter when it's not crowded, but it's a big deal during peak hours and I'm sure it helps them generate better ROIC and sales / sq foot even during the downturn. I don't like the business segment in general, but RRGB is pretty good I think. Ben Link to comment Share on other sites More sharing options...
OracleofCarolina Posted July 14, 2010 Author Share Posted July 14, 2010 I love folks that are willing to spend $15 for a burger,fries,drink and tip. I have a Red Robin right by work and when I am driving by at lunch to get a $2 slice of pizza and a water(yes,you can call me frugal), I see the parking lot for Red Robin is packed. Therefore, I am long RRGB Link to comment Share on other sites More sharing options...
UhuruPeak Posted July 14, 2010 Share Posted July 14, 2010 ...when I am driving by at lunch to get a $2 slice of pizza and a water(yes,you can call me frugal)... You mean you spend $2 for lunch AND you take the car? Wow, you big spender! a bowl of spaghetti or rice + 'some' tomato sauce (home made while you're at it) or a can of beans will set you back less than half a buck. Ok, more seriously now - I have gone to a Red Robin a few times, and always enjoyed the experience - though not the bill. Always busy, and decor modern yet timeless enough that it probably doesn't need to be revamped all the time. I can see that it would be an interesting LT investment at the right price even if I'm too cheap to go often. Link to comment Share on other sites More sharing options...
DCG Posted July 15, 2010 Share Posted July 15, 2010 Ate there for lunch yesterday. There were a good amount of people there for 2:00pm. Food was good, although pricey. The chicken sandwich & fries were around $12. Obviously good for them, but I won't spend that much on lunch frequently. The staff was friendly though, so I did have a good experience there. Link to comment Share on other sites More sharing options...
bookie71 Posted July 15, 2010 Share Posted July 15, 2010 The food is good, but we always felt the decor was a little too "plastic" for us. Link to comment Share on other sites More sharing options...
DCG Posted July 15, 2010 Share Posted July 15, 2010 I haven't looked at RR's financials recently, but one thing to note from a business perspective that I'm sure Sadar likes is that they have pretty good returns I'm a bit confused on what people really like about their returns, to be honest. If you compare them with other restaurants, they lag behind on most key metrics. Below is a comparision for last year: RRGB: ROA: 2.9% ROE: 6.31% Net Margin: 2.09% Cash Flow/Sales: 5.01% BWLD: ROA: 11% ROE: 16% Net Margin: 5.6% Cash Flow/Sales: 1.03% EAT: ROA: 3.82% ROE: 12.75% Net Margin: 2.9% Cash Flow/Sales: 5% CMG: ROA: 14.20% ROE: 19.13% Net Margin: 8.35% Cash Flow/Sales: 9.45% Link to comment Share on other sites More sharing options...
sswan11 Posted November 5, 2013 Share Posted November 5, 2013 Today trading over $82/share on strong earnings. Quadruple since 2010! Link to comment Share on other sites More sharing options...
Parsad Posted November 5, 2013 Share Posted November 5, 2013 Today trading over $82/share on strong earnings. Quadruple since 2010! Crazy! I remember a friend of mine telling me he thought it was undervalued, when he ran his proxy against them. I had bought some around $16, but sold at $28. I think it's more than fully valued right now. Don't know if he owns any right now! Cheers! Link to comment Share on other sites More sharing options...
ragu Posted November 6, 2013 Share Posted November 6, 2013 Quadruple since 2010! Definitely one that got away. I found SONC more understandable from an undervaluation perspective than RRGB around that time. And, SONC's cash flows mostly came from franchising. So, more security. Plus, I liked the fact that Omar Janjua (who had been with SNS during the turnaround and was rumoured to be in the running for the CEO position at one point) was involved in the efforts at SONC to turn around operations. I then proceeded to sell it too early! Best, Ragu Link to comment Share on other sites More sharing options...
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