MGL Asset Management Group's press release purporting to offer $7.25 per share for Krispy Kreme Doughnuts (NYSE: KKD) was pretty quickly debunked as illegitimate and, very probably, an effort to hype the stock for a quick buck. Jon Ogg reported on the mysterious offer on our sister site, BloggingBuyouts.
The stock jumped on the news of the offer, but quickly gave up all the gains and then some after media and analyst reports dismissed the offer. But anyone who jumped on the stock at the sight of the press release got burned.
How can you prevent this from happening to you? A good rule of thumb: When you're looking for information on material developments, look to the SEC filings. The offer was made solely through a press release -- something that anyone with a few hundred bucks to pay the wire fee could send into the hands of millions of investors in a few minutes. Until you see something about the "offer" in the SEC's Edgar Database, it should be regarded as a rumor. I wrote about a similarly non-materializing offer at Trans World Entertainment (NASDAQ: TWMC) back in November.
Another solution is to leave the "in-play" trading to the pros -- it's all about information and you're unlikely to have an edge. If you see a news item that a company has received an offer, don't jump in.
A private equity group unfamiliar to the stock market world claims to have made a bid to acquire struggling donut makerKrispy Kreme (NYSE:KKD). According to The Winston-Salem Journal, MGL Asset Management Group has offered $7.25 a share for the company, a premium of almost $2 a share over its closing price Monday.
The mystery surrounding MGL, its assets, ownership and ambitions have caused some to meet the proposal with skepticism. The company provides almost no information on its web site, and its spokesperson told the Journal that the bid was legit, but declined to elaborate.
The skepticism about this offer seems to stem from the wisdom and timing of such an acquisition. Although KKD just reported its first profitable quarter in over three years, overall, since selling in the $50 range before the carb craze, it has waffled ever since below the $10 mark, bottoming out at $2.50 a share just last November.
At a shareholder meeting recently, the CEO of Krispy Kreme reiterated the company's plans to build international business and increase the range of snack foods sold in convenience stores. Neither option, in my opinion, is likely to have a strong impact on the company's bottom line in the near future, if at all. One profitable quarter after three and a half years of losses in a company with a tired brand doesn't whet my appetite.
I wonder what drives MGL's interest? Perhaps they're looking at the hole picture, with a glazed look in their eyes.
Krispy Kreme Doughnuts Inc. (NYSE: KKD) which has struggled recently with allegations of mismanagement, healthier eating trends, bankruptcy filings by franchisees, and increased competition, said on Monday that it swung to a profit in the first quarter. Also on Monday, Pall Corp. (NYSE: PLL), which makes filters and purifiers, said fiscal third-quarter profit rose, boosted by favorable foreign currency translation and increased sales.
For the quarter that ended May 4, Krispy Kreme reported a profit of $4 million, or 6 cents per share, compared with a loss of $7.4 million, or 12 cents per share in the prior year quarter, when results were cut into by refinancing and litigation charges.
However, revenue fell 7% to $103.6 million from a year ago. The Winston-Salem-based doughnut retailer said same-store sales fell 3.9% overall, but rose 1.2% at company-owned stores.
Krispy Kreme shares rose 48 cents on Monday, or 14%, to $3.90, but slipped in after-hours trading. Shares have risen 23.4% year to date, but are still well off their 52-week high of $9.50.
Today's pending home sales showed a 6.3% gain from March to April, although much of the gains are being attributed to bargain hunters. One other help may have come from Treasury Secretary Hank Paulson, who said he would never rule out any tools such as intervention. Even OPEC noted that they wanted to have a meeting to discuss the inequality of current oil prices versus the current supply-demand models and this took off more than $4.00 per barrel of oil. Below are today's unofficial closing prices:
Krispy Kreme Doughnuts Inc. (NYSE: KKD) shares surged by 10.5% to $3.78 by the final minutes of trading after the company announced that it earned $0.06 EPS for the quarter.
Lehman Brothers Holdings Inc. (NYSE: LEH) was a huge mover today after the company raised some $6 Billion to bolster its books after reporting much wider than expected losses. Shares were down 11.5% at $28.55 in the final minutes today.
Pier 1 Imports Inc. (NYSE: PIR) saw a sharp drop of 22% to $5.19 by the final minutes today after making an offer to acquire a smaller rival, the parent of Cost Plus World Markets.
This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and check out other Battle of the Brands posts.
Oh, how the sugary have fallen. Ten years ago, even five, you and I both know how this would have come out. In the standoff between longtime national fried-dough pusher Dunkin' Donuts and upstart sweet freak Krispy Kreme Doughnuts (NYSE: KKD), Krispy reigned supreme. The chain was rolling out new franchises as fast as dough circles could parade around its restaurants on shiny metal racks, and each time it did local police stations did overtime directing traffic.
Somehow, the mighty fell after the considerable sugar high, largely connected to poorly-managed finances, badly-handled expansion, and a sudden national fear of carbohydrates. All the while, Dunkin' Donut managers everywhere continued to plod along, making the doughnuts, and quietly stirring a blue-collar breakfast revolution. One day America woke up and realized, hey, Dunkin' Donuts' coffee is good! Someone named it "Better than Starbucks" and it soon became clear that the product guys had realized something: we make a lotta money off of coffee. Actually, more than half of the company's revenue.
Some believe the current financial crisis is the most serious since the Great Depression and if so some of the largest companies in the country could be taken over and cease to be independent public corporations. Huge firms with vulnerable businesses, competitive pressures, and weak balance sheets may end up being takeover targets. Here is 24/7 Wall St.'s predictions of possible takeovers that could happen in the near future if the current crisis persists. They include McDonald's buying Wendys, VW acquiring Ford Motor, Wal-Mart getting Sears, Wells Fargo buying out Washington Mutual, J&J nabbing Boston Scientific and more.
Dealbook is reporting (although speculating is probably a better word) that Krispy Kreme Doughnuts (NYSE: KKD) may be preparing to put itself up for sale. This shouldn't come as too much of a surprise given the problems Krispy Kreme has experienced over the last few years.
Just in 2007, Krispy Kreme fell from nearly $14 a share to under $3. Although this is bad enough, the long-term picture is even worse. In 2003, Krispy Kreme hit $50, so the five year performance is something like negative 90%. While health fads are in part to blame, with carbohydrates being vilified in many popular diets, most analysts suspect that Krispy Kreme's management is largely responsible for the poor performance.
Marketplace's Herb Greenberg, who has long thought that Krispy Kreme's old CEO needs to go, is the main source of speculation that Krispy Kreme may be looking for a buyer. He argues that the recent resignation of the old CEO, Daryl G. Brewster, suggests that the board is finally getting serious about turning things around. More importantly, the new CEO, James H. Morgan, has an investment banking background, and his involvement suggests that the company is looking for outside intervention.
Say what you want about the tasty warmth of its fresh-from-the-fryers glazed confections, Krispy Kreme Doughnuts (NYSE: KKD) hasn't been leading the sweet life of late. Beleaguered and beaten down in the midst of what CNN Money calls a "sputtering turnaround effort," the company remains challenged with an anemic share price, struggling sales, and folding franchise locations.
Today, Chief Executive Daryl Brewster, who took the reins in March 2006, announced plans to retire for personal reasons. Brewster will leave his post at the end of this month. The board quickly named James Morgan, board member since 2000 and chairman of the board since 2005, to take the vacated seat.
In other news, Krispy Kreme has followed the lead of many fast-food concerns to announce that all products sold in the U.S. are now free of trans fats. KKD officials said it has been introducing zero-grams trans fat products across the country during the past several months.
Investors are cheering this combination of news, as the stock has spiked 9.5% in today's trading. Of course, given the stock's current price (around the $3 level), this represents an absolute increase of 27 cents per share.
2008 Best Values in Public Colleges Here is where to find a first-rate education without breaking the bank. For in-state residents the University of North Carolina tops the University of Florida. If you are out-of-state the top school you may never have heard of. It is SUNY Geneseo, a small liberal arts college in western New York. Top 100 Public Colleges - Kiplinger.com Rankings: Top 100 Colleges
The Coming Credit Card Crunch The subprime mortgage crisis has cost millions of homeowners their homes. Now it threatens to put the squeeze on even more consumers by spilling into the credit-card market. Here's what you should watch out for this year. The Coming Credit-Card Crunch | SmartMoney.com
Shares of doughnut chain Krispy Kreme (NYSE: KKD) are surging today as the company reported its loss had narrowed to $798,000, or 1 cent a share, in the third quarter ended October 28, from $7.2 million, or 12 cents a share, a year earlier. For the last four years the Krispy Kreme stock has been as tasty for investors as a week-old doughnut lying around uncovered. After trading in the upper $40s a few years ago, the stock has been hit by healthier eating trends, mismanagement, and even bankruptcy by some of its franchisees.
For full disclosure, I try my best to help the stock, as I buy the doughnuts whenever possible, as I think they are awesome. For me, nothing's like a glazed Krispy Kreme.
Notwithstanding today's surge in the stock, the outlook for the company is murky at best. It said that there will be more store closures which will impact revenues. Its balance sheet is nothing to write home about either. As of October 28, the company had about $23 million in cash on its balance sheet, and $88 million in debt. It had about $11 million in additional debt capacity available under its credit facilities.
While I probably wouldn't get near the stock until we see continued evidence of a turnaround in their financials, I would jump at the chance of getting another dozen to eat while I write my next few posts! What's your favorite flavor?
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. Disclosure: Writer has no position in any stock mentioned as of 12/6/07.
CEO of the Year Coming into his own in his third year at the helm of McDonald's, Jim Skinner has made a deep impression. The evidence is on the bottom line, on the menu and on employees' lapels. Other finalists for CEO of year are Indra Nooyi of PepsiCo, Jeff Bezos of Amazon, Michael Ahearn of First Solar and Terri Lanai of MGM Mirage. CEO of the Year 2007 - MarketWatch Also: Worst CEO of Year Is Sears' Eddie Lampert
5 Stock Surprises of 2007 These companies should see continuing 2008 growth despite market and economic woes. They are Coca-Cola, Costco, Expedia, Eaton Vance and Chicago Bridge & Iron. Five Stock Surprises for 2007 - Kiplinger.com
New Rate Freeze May Help Borrowers Bear ARMs If you're a homeowner sitting with an adjustable rate mortgage that is about to reset to a much higher rate, what should you do? For now, wait to see what help the government will bring. Homeowners may benefit from relief plan - Bankrate.com
Jamba Juice (NASDAQ: JMBA) has been an extremely disappointing performer since it went public through its acquisition by a special purpose acquisition vehicle.
Shares closed at $3.39 on Monday, down from a 52-week high of $11.25 on this day of last year -- A spread of 365 days between the current price and the 52-week high is usually a sign of a difficult stretch.
Perhaps things are getting better: Jamba Juice has reached a deal with Nestle to sell its products at groceries stores in eight states in the western United States. The plan is to eventually expand the program nationally, perhaps internationally, and also target convenience stores and other possible outlets. Nestle (OTC: NSRGY) will manufacture and distribute the beverages.
With its stock in the toilet in light of operational underperformance, this may be just what Jamba needs. But as anyone who witnessed the Krispy Kreme (NASDAQ: KKD) saga can attest, rapid expansion by a premium stand-alone specialty food retailer into mass market distribution can lead to bad results: big losses and irreparable damage to the brand.
Savvy marketing and responsible stewardship of the Jamba franchise on the part of management could make this a big success. But if the company's performance as a public company is any indication, that's not something investors should bet on.
Fidelity Magellan fund manager Peter Lynch became a legend in the 1980's with his supersized returns and folksy wisdom: Buy what you know. In his books, he urged investors to exploit their amateur edge and invest in the stocks of companies they knew from shopping. By latching on to an up and coming chain, investors could find those elusive ten-baggers, he suggested.
Fast forward to 2007. In the past few years, we've seen instances of this strategy leading to disastrous results. Krispy Kreme Doughnuts (NYSE: KKD) was all the rage as it expanded nationally. But alas, overexpansion and accounting woes made that stock a -10 bagger, with investors losing 90% of their value in some cases.
And as the New York Timeswrites, Starbucks Corporation (NASDAQ: SBUX) stores are as hot as ever, in that they always seem to be packed. But same store sales are struggling, and the stock is well off its highs.
Is Lynch's wisdom outdated? Maybe. One problem is that the eighties were an era filled with regional going national stories. Now, nearly every industry seems to have a dominant player with a national presence. It just isn't easy to find a company that's selling hot in your city but hasn't yet reached the other coast yet.
A private equity group unfamiliar to the stock market world claims to have made a 
Today's pending home sales showed a 6.3% gain from March to April, although much of the gains are being attributed to bargain hunters. One other help may have come from Treasury Secretary Hank Paulson, who said he would never rule out any tools such as intervention. Even OPEC noted that they wanted to have a meeting to discuss the inequality of current oil prices versus the current supply-demand models and this took off more than $4.00 per barrel of oil. Below are today's unofficial closing prices:
This post is part of our 
Dealbook is 
Apple shares rise on report Steve Jobs is free of cancer
Toyota whups GM in the first half of 2008
Bush: Wall Street got drunk!
