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Krispy Kreme Doughnuts, Inc. Message Board

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  • undervalued_investments undervalued_investments Jun 18, 2006 6:01 PM Flag

    Buy KKD - The long argument

    Dear shorts,

    I feel honored that you consider me the best long to come along in a long time. However, if this in fact is true, this is also very worrisome.

    As I said, I do not profess to know all of the answers about KKD. I have done some research, but bear in mind this is only a small part of my investments and I do not intend to spend much more time researching this stock. If you guys can point me to the very best specific cases against this stock, I may take a look.

    Again, I am not even sure the stock is worth $8 a share right now. But with stocks, determine correct stock valuations many times don't matter. What many times matters more is to see who has bought the stock and who is supporting it. For example, the involvement of the Arab billionaire is a very positive sign.
    I cannot point to specifics as to why this stock will reach $16, but based on previous experience, I think this is an attainable goal. And I WILL NOT RECOMMEND THIS STOCK as a buy and forget stock. It needs to be carefully watched. I see what next year brings, but if you asked me right now I would say I doubt I will hold the stock beyond 2007.

    Responding to meme:

    >Look, you mention 225mm but you ignore the 80mm out of it that was cancelled. You mention blogger predicting no bk while ignoring his description of the wholesale business (most of KKD's revenue) as being basically worthless. You ignore repeated advice of looking at comparable lawsuits and you simply do not want to read the SC report.<
    Look, those are factors, but I bet you the average long does not care about them. The $19 M should be able to carry them for at least a year (based on latest trends). Brewster is supposed to fix wholesale, isn't he? And as to the SC report, just tell me, what effect did it have on the stock when it was released? Why should it matter more now?

    >KKSF where to find info? take a wild guess my friend. ok i'll tell you. 10K and google. <
    I am assuming KKSF is one of the smaller franchisees, so it won't matter much if they go belly up. On the other hand, it is my understanding that hot summers are the worst for donuts (unless they sell icecream in the store ;) ). My guess is that if someone is on the brink of folding, right now, or actually a few weeks ago, would had been the time to do it (since the summer will be weak, no reason to prolong the agony). Right? Or where do you think KKSF will fold? What are they waiting for?

    >if you're not open-minded you will find no serious discussion here. besides you repeated not caring about valuation, so you're just a speculator. I am not going to talk with you<
    Yes I am. You have to be (speculator). As I said, this is not a buy and forget stock.

    > much from now on. I've pointed you to information sources that can help you. If you are capable of seeing yourself as imperfect, you will explore these sources.<
    Again, I am interested and invested in te stock, but I am not committed to "invest" a lot of time on it. I think I know the basics and what I consider to be necessary. As you guys said, probably I already know more than the average long.

    >P.S. no one is prediciting the timing of a bk here. all we're saying is (a) that kkd is way overvalued and (b) in the long run it's been proven that stocks trade at their true value. So KKD will go down.<
    You may be right, I am not arguing that.

    >Even if it turns around perfectly. Evenif they stay out of bk, even if there were no lawsuits, no debt, no interest, no cooper fees, none of that!!---> they would still be expensive at these levels with an EV/sales of about 1.5. That's at least 3x what they deserve to trade at according to historial data and comparable stocks.<
    OK, just tell me... for how long have they been too expensive? Do you think that will suddenly change?

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