Who knew what when? Our price divergence model shows that KONA is outperforming peers over the 6 and 12 month time horizons but underperforming on 1 week, 2 week, and 1 month durations.
All of our previous work on KONA suggested that the company was headed in the right direction. In June 2011, the board fired the CEO Marc Buehler and now we have learned that CFO Mark Robinow is no longer with the firm.
The company made the announcement of Mark leaving the firm in a press release announcing a share repurchase program of $5 million. As I see it, the important news is the fact that Mark is no longer the CFO, not that the company thinks their stocks represents a good value.
However, even putting Mark’s departure aside, the announcement of a share repurchase program represents a big red flag! The first use of any cash the company has should be to build stores not buy back stock. In my view, the stock repurchase plan is an admission by the current executive team that the departure of the CFO is a real problem.
Until further notice, any positive bias we may have had on KONA is no more.
As one client said to me this morning, it's “amateur hour” in The Grand Canyon State!
Howard Penney
Managing Director
Rory Green
Analyst