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Krispy Kreme Doughnuts, Inc. Message Board

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  • undervalued_investments undervalued_investments Jun 18, 2006 10:27 PM Flag

    Buy KKD - The long argument


    Thanks for your thoughtful post.
    I do recognize that at the present time, KKD's achilles heel is the SEC investigation and the lawsuits. The lawsuits for now are second concern, since these things take so dam long to resolve, and since I have said, at least right now I see little incentive for the plaintiffs to push their case (in terms of getting something out of it).

    The SEC investigation is a big puzzle. I do recognize that they can return a negative verdict tomorrow. I am not too worried about penalties, since the SEC won't like to be KKD's terminator. But if the SEC founds guilt and wrongdoing, that would pretty much assure the result of the lawsuits (if they ever go forward), both from the shareholders and franchisees. My sense is that Cooper, keeping the cash to a minimum, is somewhat insulating KKD from aggressive action on the lawsuit front.

    Aside from that, there's probably a way to resolve all of the other problems the company is facing.

    On the other hand, every short here must recognize that, there is something very, very special about KKD. I do not know if it's a mysterious backer, but there is an aura of invincibility and resiliency in KKD that I have never seen in other stocks. After all, there must be powerful reasons the stock is currently trading above $8. Hope you all agree with this.

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