Important - NO! - I have no inside knowledge.
It's simple - They are not popular with Wall street firms, and are going to have difficulty raising capital through other means. They have 20 mil or so in cash, and plan on opening at least a couple dozen stores in the next two years. I would expect an issue of about 10-15 million shares at about $6.
They can pay off their debt making the company more profitable, increase working capital, and build a few stores in carefully chosen locations.
It might be a hit in the short term, but increases the likelihood that their stock will find a place in mutual fund and 401k portfolios.
"increases the likelihood that their stock will find a place in mutual fund and 401k portfolios"
What the heck are you talking about?
No 401k I know of allows participants to buy/sell individual stocks.
You lost some credibility with that statement.
Like I have said three or four times - This stock is a religion. I have four $7.50 May 11 put contracts. I am not trying to manipulate the price - Nor am I capable of it.
I am simply explaining why I purchased them - I think the stock, although a solid company, is overpriced. Many Wall street analysts agree with me.
On the other hand, if some novice investor who just got 100K from her grandmothers estate, invests it wisely instead of putting it all in to Krispy Kreme because it is "Going to the Moon" - I have done a good deed.
$8 did seem a little overbought. Equity issue makes some sense with the 3 small houses just recently starting coverage. KKD's problem is their guaranteed debt for struggling franchisees still out.
I have puts on the stock, of course - Not a tremendous number. Everyone who posts on these boards has a profit motive, as do you.
It does not, however, mean that I am part of a conspiracy, or that what I am saying isn't true.
Sounds like a possibility but in the high 9's is more likely. Why start the year off or end the year on a down note, when the momentum is clearly to the upside and you can do the offering a few dollars higher. Institutional money flow will start coming in to this soon and that's when the secondary should be announced. JMHO.
This is pointless - Like I said in an earlier post, the KKD people are a religion, and I am an infidel.
There just isn't any financial foundation to support this stuff, it is all imaginings about how Krispy Kreme is going to conquer the donut world and beyond. It is a donut franchise that isn't fundamentally different from Dunkin Donuts or Tim Horton's
The average P/E in this industry is about 20 - KKD currently has a P/E of 52, and less than 25 cents cash/share.
No one on Wall street is going to buy in to a second Krispy Kreme stock bubble.