BKWH - Burger King Worldwide Holdings

[bmichaud]

I know the presentation has already been posted somewhere, but thought I'd start an official thread as I found the 2011 10K on BKWH's website. Didn't realize non-traded companies still filed....anyway, here is the filing:

 

http://investor.bk.com/phoenix.zhtml?c=87140&p=irol-sec

 

 

As long as it doesn't get bid up significantly upon listing, I think this could be a very neat opportunity over the next few years. IMO, Ackman is most likely understating the opportunity as his analysis not fully break out the projected debt pay down and likely signifiant dividends 3G will want to pay to themselves. Debt is currently 4.5 turns, which if paid down to perhaps 3 will improve both the financial health and multiple of the Company.

 

At the right price, looks like a good secular growth story that should perform well regardless of the economic backdrop.

[alertmeipp]

I like their Whoppers on Wednesday. But Burger King needs better QC IMO. Some I went to serve hot tasty burgers, some are cold and dry. MCD does a much better job.

[loganc]

Potential tax inversion for BKW:

 

http://online.wsj.com/articles/burger-king-in-talks-to-buy-tim-hortons-1408924294

 

 

[Liberty]

Looks like Ackman is doing alright with that investment:

 

http://www.bloomberg.com/news/2014-08-25/ackman-s-pershing-square-makes-171-million-on-burger-king-wager.html

 

Pershing's stake now worth 1.2 billion.

[Liberty]

Ackman’s Pershing Square Makes $178 Million on Burger King

 

http://www.bloomberg.com/news/2014-08-25/ackman-s-pershing-square-makes-171-million-on-burger-king-wager.html

 

Um, maybe look one message above before posting?  ;)

[dcollon]

Shit Liberty...that's funny.  Sorry, I'm deleting it now

[Liberty]

Shit Liberty...that's funny.  Sorry, I'm deleting it now

 

No worries. I just thought it was funny :D

[TorontoRaptorsFan]

I'm sure Ackman is gloating meanwhile how did those investments in Herbalife, JC Penny, and the Hong Kong dollar go…

 

 

[Liberty]

I'm sure Ackman is gloating meanwhile how did those investments in Herbalife, JC Penny, and the Hong Kong dollar go…

 

What's what supposed to mean exactly?

 

Nobody bats a thousand, but he's got a gross CAGR of over 27% in the past decade (which wasn't exactly the easiest one for investors), so I think that on balance he's doing ok. No idea if he's gloating, but he doesn't have reasons to hang his head in shame either... When you make big bold concentrated bets very publicly, you'll have big successes and big failures; if on average you have more successes than failures, you'll do well over time.

[loganc]

The plot thickens - Buffett to provide some financing for the deal:

 

http://online.wsj.com/articles/warren-buffett-to-help-finance-burger-kings-takeover-of-tim-hortons-1409012196

[loganc]

I'm sure Ackman is gloating meanwhile how did those investments in Herbalife, JC Penny, and the Hong Kong dollar go…

 

What's what supposed to mean exactly?

 

Nobody bats a thousand, but he's got a gross CAGR of over 27% in the past decade (which wasn't exactly the easiest one for investors), so I think that on balance he's doing ok. No idea if he's gloating, but he doesn't have reasons to hang his head in shame either... When you make big bold concentrated bets very publicly, you'll have big successes and big failures; if on average you have more successes than failures, you'll do well over time.

 

I will echo Liberty's comments.  I think anyone that is familiar with the process of investing will understand that mistakes are simply part of the game. 

 

Also, can you really mark HLF as a loss at this point?  Given the history of his MBIA position, I am not sure that I would say this situation is over.  Also, to be blunt, look at the scoreboard. 

[loganc]

The plot thickens - Buffett to provide some financing for the deal:

 

http://online.wsj.com/articles/warren-buffett-to-help-finance-burger-kings-takeover-of-tim-hortons-1409012196

 

Has anyone done some math to figure out what this deal will ultimately look like?  It seems to me that the capital from Buffett will end up being used by BKW to repurchase a block of shares from 3G.  This makes it easier to see how the transaction will still allow for the pro forma entity to be domiciled in Canada, with THI shareholders holding >50% of the combined company.  With my rough assumptions, I can see that 3G can still own roughly 30% of the combined company after such a transaction.  Also, I could be completely wrong with how I am thinking about this deal.

[peter1234]

I'm sure Ackman is gloating meanwhile how did those investments in Herbalife, JC Penny, and the Hong Kong dollar go…

 

What's what supposed to mean exactly?

 

Nobody bats a thousand, but he's got a gross CAGR of over 27% in the past decade (which wasn't exactly the easiest one for investors), so I think that on balance he's doing ok. No idea if he's gloating, but he doesn't have reasons to hang his head in shame either... When you make big bold concentrated bets very publicly, you'll have big successes and big failures; if on average you have more successes than failures, you'll do well over time.

 

I will echo Liberty's comments.  I think anyone that is familiar with the process of investing will understand that mistakes are simply part of the game. 

 

Also, can you really mark HLF as a loss at this point?  Given the history of his MBIA position, I am not sure that I would say this situation is over.  Also, to be blunt, look at the scoreboard.

 

Looks like Ackman has investments from total loss to extreme home runs.

 

Overall excellent returns.

 

General Growth increased like 300x ($100M to $30b). This must have helped his returns.

 

;)

[cubsfan]

I'm sure Ackman is gloating meanwhile how did those investments in Herbalife, JC Penny, and the Hong Kong dollar go…

 

What's what supposed to mean exactly?

 

Nobody bats a thousand, but he's got a gross CAGR of over 27% in the past decade (which wasn't exactly the easiest one for investors), so I think that on balance he's doing ok. No idea if he's gloating, but he doesn't have reasons to hang his head in shame either... When you make big bold concentrated bets very publicly, you'll have big successes and big failures; if on average you have more successes than failures, you'll do well over time.

 

I will echo Liberty's comments.  I think anyone that is familiar with the process of investing will understand that mistakes are simply part of the game. 

 

Also, can you really mark HLF as a loss at this point?  Given the history of his MBIA position, I am not sure that I would say this situation is over.  Also, to be blunt, look at the scoreboard.

 

Ackman repeatedly warned that his Hong Kong dollar trade would likely not work out.

He stated it was a very asymmetric trade - either a 10 bagger or a zero - most likely a zero,

so size it correctly. So far it's a zero - hard to be critical of this.

[Kraven]

I'm sure Ackman is gloating meanwhile how did those investments in Herbalife, JC Penny, and the Hong Kong dollar go…

 

What's what supposed to mean exactly?

 

Nobody bats a thousand, but he's got a gross CAGR of over 27% in the past decade (which wasn't exactly the easiest one for investors), so I think that on balance he's doing ok. No idea if he's gloating, but he doesn't have reasons to hang his head in shame either... When you make big bold concentrated bets very publicly, you'll have big successes and big failures; if on average you have more successes than failures, you'll do well over time.

 

I will echo Liberty's comments.  I think anyone that is familiar with the process of investing will understand that mistakes are simply part of the game. 

 

Also, can you really mark HLF as a loss at this point?  Given the history of his MBIA position, I am not sure that I would say this situation is over.  Also, to be blunt, look at the scoreboard.

 

Looks like Ackman has investments from total loss to extreme home runs.

 

Overall excellent returns.

 

General Growth increased like 300x ($100M to $30b). This must have helped his returns.

 

;)

 

When his latest letter made the rounds I was surprised at how strong his returns have been. I had not realized they were that good. There is a lot of noise around his well publicized mistakes, but it goes to show that one needs to ignore noise.

[Palantir]

Funny that Buffett blasted the idea of tax inversions during the annual meeting.

[jay21]

Funny that Buffett blasted the idea of tax inversions during the annual meeting.

 

Don't think this is a tax inversion.

 

http://www.bloombergview.com/articles/2014-08-25/burger-king-may-move-to-canada-for-the-donuts

[Zorrofan]

Funny that Buffett blasted the idea of tax inversions during the annual meeting.

 

Don't think this is a tax inversion.

 

http://www.bloombergview.com/articles/2014-08-25/burger-king-may-move-to-canada-for-the-donuts

 

They may not be calling it that, but the "new" company will be located in Canada where the corporate tax rate is lower and the company will not be taxed on world-wide earnings. Likely trying to avoid the whole tax inversion controversy by not even mentioning tax benefits.......operational headquarters won't move though.

 

cheers

Zorro

[Uccmal]

I am perplexed why Tim Hortons would want anything to do with this deal.  Although I dont particularly care, the culture of Burger King may ruin the culture of Tim Hortons. 

 

Tim Hortons sells something like 50% of all fast food in Canada, and 75-80% in the baked goods/coffee category.  Burger King, on the other hand, has struggled for 50 years to stay alive in Canada at all. 

 

Other than enriching the pockets of the TH management, I just dont see the benefit to TH. 

[rogermunibond]

FT's Lex column has a good take on the deal being mainly related to TH's lower margins selling franchisers food/drink supplies.  Effective tax rates for BK and TH being essentially the same (27.4% vs 26.8%).

 

http://www.ft.com/intl/cms/s/3/e66a1c26-2c73-11e4-ada0-00144feabdc0.html

[merkhet]

Funny that Buffett blasted the idea of tax inversions during the annual meeting.

 

Don't think this is a tax inversion.

 

http://www.bloombergview.com/articles/2014-08-25/burger-king-may-move-to-canada-for-the-donuts

 

Really good article, in general, on the tax inversion issue. Also, I love the snarkiness aimed at millennials.

[KCLarkin]

Has anyone done some math to figure out what this deal will ultimately look like?  It seems to me that the capital from Buffett will end up being used by BKW to repurchase a block of shares from 3G.  This makes it easier to see how the transaction will still allow for the pro forma entity to be domiciled in Canada, with THI shareholders holding >50% of the combined company.  With my rough assumptions, I can see that 3G can still own roughly 30% of the combined company after such a transaction.  Also, I could be completely wrong with how I am thinking about this deal.

 

3G will own 51% of the company, per the press release. 3G won't actually own any shares in the new company. Instead, they will own units of an Ontario-based Limited Partnership (convertible to common in 1 year).

[oddballstocks]

Funny that Buffett blasted the idea of tax inversions during the annual meeting.

 

Don't think this is a tax inversion.

 

http://www.bloombergview.com/articles/2014-08-25/burger-king-may-move-to-canada-for-the-donuts

 

Really good article, in general, on the tax inversion issue. Also, I love the snarkiness aimed at millennials.

 

Ahh millennial bashing.  It sucks not being taken serious in life, but then I realize that those in their 40s, 50s, and 60s who are bashing us would switch places in an instant.

 

I've come to appreciate in adulthood there are two stages: too young and too old.  For years one is too young, too inexperienced, too new.  Then suddenly they hit an age (opinions differs on exactly what it is) and they're too old fashion, too structured, closed to new ideas.  There is no middle ground, but I'd rather be young over being old.. Unfortunately I'm quickly moving towards too old.

[Libs]

 

 

Ahh millennial bashing.  It sucks not being taken serious in life, but then I realize that those in their 40s, 50s, and 60s who are bashing us would switch places in an instant.

 

I've come to appreciate in adulthood there are two stages: too young and too old.  For years one is too young, too inexperienced, too new.  Then suddenly they hit an age (opinions differs on exactly what it is) and they're too old fashion, too structured, closed to new ideas.  There is no middle ground, but I'd rather be young over being old.. Unfortunately I'm quickly moving towards too old.

 

Sorry for the derail...but I am 52. I would not want to go back to 25 or even 35. What I had in energy I lacked in wisdom ( and general contentment).

 

BTW, I would have bet everything I had at age 25, that I would NOT have felt this way now.

 

Go figure.....

 

 

 

 

 

 

 

 

 

[loganc]

The transaction is expected to be taxable, for U.S. federal income tax purposes, to the shareholders of Burger King, other than with respect to the partnership units received by them in the transaction. The transaction is expected to be taxable to shareholders of Tim Hortons in the U.S and Canada.]The transaction is expected to be taxable, for U.S. federal income tax purposes, to the shareholders of Burger King, other than with respect to the partnership units received by them in the transaction. The transaction is expected to be taxable to shareholders of Tim Hortons in the U.S and Canada.

 

If I understand this correctly, current gains in BKW shares will be taxed when this deal closes.  I wonder what Ackman thinks of this.  Also, 3G is talking all partnership units which defers taxes - nice move for them.