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Krispy Kreme Doughnuts, Inc. Message Board

  • iceburg0 iceburg0 Oct 18, 2001 2:21 PM Flag

    a buy of 10,000 shares at 37 woooooow


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    • with thousands of stores and donuts is only 15% of their business. Our little town has 8 donut shops - all struggling against Tim Hortons. Tim Hortons has long ago realized that donuts is no longer their main money maker.

    • Thanks for clarifying that - I would only add that in addition to shorting, usually there is some hedge postion also taken that increases costs, e.g. buying deep out of the money calls, etc..

      So who's really brave and betting neutral?

      Keep in mind the difference between bravery and stupidity is usually the result :-)

    • This is nuts. Here you have a Krispy Kreme donut store selling for 10X a McDonald restaurant. It should be the other way around.

    • Does the difference have anything to do with the number of competitors? McDonalds has a zillion competitors and KK has maybe 5 - 10.

    • "you get the access to the money for a stock you have just sold. This is the essence of shorting. "

      You sure you've shorted before? What broker gave you access to the money?

      You get access to any money from the sale which exceeds the purchase cost, marked to market each close. But you have to front the necessary margin money to cover the required future purchase. And if the purchase cost at market close on any given day exceeds the initial margin requirement, it is adjusted against your margin power and if you exceed your margin power you get to send your broker a check to keep the short position in tact. If you cant, they buy for you. You certainly dont "get the money" from the sale.

    • If price did hover in the 30-35 range for an extended period of time that would not be a draw but a positive for shorts.Why? Because when you short a stock you get the access to the money for a stock you have just sold. So would you rather be long and out the money or short and have the money at your disposal. This is the essence of shorting.

    • Well, if you are Wendy's, you spin off 50% interest in Tim Horton's, which, at KKD's valuation would value US$10B - three times the current valuation of Wendy's. Oh, of course, the 6000 Wendy's franchises are not included in this valuation.

      What is amazing it that those who profess that growth matters, forget that in fact growth does matter. Assume that KKD does grow 10 times the number of stores it has now, would you expect the valuation of KKD by US$20 billion. Of course not, the franchise will have had "matured" and the value of the stories would more closely resemble that of current "mature" stores such as Tim Horton's or Dunkin Donuts.

      Those who point to the growth of the stock should know that they are not "investing" but rather speculating in a pyramind scheme. The many arguments on this follows the simple line that longs believe that they are in at the beginning of the pyramid scheme, and thus, can reap the benefits. There is good cause to believe that they can, obviously pyramid schemes do make money for a stretch.

      Those short, simply believe that that stretch is coming to a close and hope to reap the benefits for when the pyramid crumbles.

      That leaves both parties speculating on a dramatic outcome. Interestingly, a third possiblity could occur - the price and valuation hover at current level for an extended period, with the stock going between 30-35 - in which case, neither speculator wins.

      Any calendar spreads among any readers?

    • 2. Despite having 152 times as many stores as Krispy Kreme Doughnuts (KKD:NYSE - news - commentary - research - analysis), McDonald's (MCD:NYSE - news - commentary - research - analysis) has a market capitalization that exceeds Krispy Kreme's by only 19.5 times. McDonald's has 29,000 stores with a market cap of $38 billion, while Krispy Kreme has 190 stores with a market cap of $1.94 billion.

    • each of KKD's 190 donuts stores. How can you make a profitable return on a $ 10 Million Dollar investment in a donut shop?

    • "I can't believe the absolute stupidity on this board!" L.I.Guy, these are your comrades. I requested my certificates before the last gap-up in April, and it took a MONTH for my broker to get them all together!(short-interest being what it was, he said). Bought more today at $37. I'm sure my new broker won't have any trouble getting them to me right away. Expect another gap-up at the $43 level all the way to $49.10

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