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Author: jackcrow Big gold star, 5000 posts Feste Award Nominee! Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 609  
Subject: Re: A secondary offering Date: 4/6/2002 9:54 AM
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Porter,

Long time no see

I have a slightly different view than DavidG. I have experiance w/ 2 companies that do/did what your are talking about, takeing distressed shops and turning them around. If they are good at what they do they are money makers in the short term (2-10 years). In my opinion eventually they become too bloated to be a high effeciency machine and they evolve into just another company. They also may be a bit volitile. If the analysts that follow the company think they made a bad recent acquisition the stock falls. If the company knows what its doing it rebounds. This can happen over and over, the analysts never seem to figure it out.

I assume you've done thorough DD but I would double check their supply chain. For a restaurant they can lower over head some buy restructering management but where they are going to make money is by supplying food cheaper than the previous establishment. So you might want to compare them to other established chains.

As for the second offering DavidG is probably on target. It is probably cheaper for them to offer more stock and pay down debot or borrow the money. If you want to shop for a good buy point it might be after the second offering when the shares first become 'diluted'.

The long term effects will probably have little to no effect. Either the company will continue to succeed or not.

jack
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