FEELS LIKE 2007

And that was a very ugly “bubble”

 

Yesterday, it was HOG  and today it’s PLCM…

 

According to today’s rumor mill, Polycom is in talks with Apax Partners over a deal that could take the company public.

 

The daily rumor mill is a scary reminder of 2007 and we know how that ended.  Unfortunately, with the FED keeping rates low for an extended period of time, the chance of this getting crazier before it’s over is very high.  Here is what we have so far – PLCM, HOG, HUN, RSH, WHR and GME are all stocks that have been in the rumor mill about some sort of buyout speculation. 

 

In the restaurant space, both Benihana and CKE Restaurants have recently announced bids on the table.  Adding to the “noise,” the New York Post reported last week that Nelson Peltz was considering a counter bid for CKR. 

 

The following is a list of restaurant companies that could be on the A list for a private equity transaction and/or for becoming victim of the rumor mill:

 

CAKE, PFCB, MSSR, TXRH, BOBE, EAT, CHUX, RRGB, PEET and CPKI

 

In compiling this list, we are trying to avoid waking up one day to a “potential” short up 10% on “buyout” rumors.  While it may be easy to take issue with the fundamentals or potential valuation of any of these names, what you can’t deny is that all of these companies have very little funded leverage and generate substantial free cash flow. 

 

Howard Penney

Managing Director


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