KKD - You can't make this stuff up!

The opportunity to take KKD private has come and gone. Daryl Brewster, the Ex CEO, had one shot and he did not get it done. At current prices, KKD is trading at 13x LTM TEV/EBITDA and the EBITDA is not growing, but declining. It's hard to find another restaurant company that is more expensive than KKD. So why would some unknown asset management firm try to buy the company at $7.50? This has to be a joke. If this bid is real, I wish I could short the company buying it.

The best part of the whole story is what is being reported by the Winston-Salem Journal. The article questions the legitimacy of Dee Guess, the managing director of MGL Asset Management. Apparently, Mr. Guess has had multiple lawsuits filed against him and has used known aliases including Mario Guess, J.D. Guess and Jerry D. Guess. The paper also said, "There is no listing of principals in the company, no companies under MGL's management or ownership, and no track record of the principals managing and owning businesses." MGL was listed as incorporating in January on the N.C. Secretary of State's Web site.

There is nothing better than a warm glazed Krispy Kreme doughnut. Unfortunately, stiff competition, razor thin margins and rising commodity costs put significant pressure on the business model. The international opportunity is real, but not enough to offset the pending pressure on the domestic business.