Friday, February 26, 2010

Friday action (CKR, CROX)



Stocks are slightly positive with a couple of hours left in the trading week.

Among gainers is CKE Restaurants (CKR), owner of Carl's Jr. and Hardee's, up 25% on news that they'll be LBO'd by Thomas H. Lee Partners.

THL is offering $11.50 per share, a 24% premium to yesterday's close. Embarrassing for CKR is the fact that they're selling the company for about .34 times sales, while Burger King, Jack-in-the-Box, and McDonalds' enjoy P/S of .96, .47, and 3.05 respectively. That cheap valuation is likely why the ambulance chasing securities lawyers have whipped out their robo-lawsuit machine, which spits out lawsuit invitations within minutes of every single buyout announced, with the laughable due diligence work of quoting a higher analyst price target. To be fair, the company likely DID sell far too low...but that's the risk you run with a high insider concentration of illiquid stock.

A look at CKR's income statement shows a lot of costs that can be cut to make this an attractive buyout:



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Among losers, Crocs' (CROX) CEO departure is hitting shares today, sending them down 14%. Investors were stunned by the announcement, as CEO JOhn Duerden has been on the job only a year.


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