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Jack in the Box Inc. Message Board

  • john.heil2 john.heil2 Jun 21, 2011 8:00 PM Flag

    Smokin hot Qdoba

    Just got back from two week vacation in my hometown of Milwaukee. There are some 20+ Qdoba restaurants in the metro area and the several I visited were really busy. I can confirm that catering has been a winning approach for this restaurant concept. Managers are ecstatic about the consistency of the orders to go and those delivered. They are knocking em dead just like Chipotle, Qdoba's half-sister also out of Denver.

    JACK itself will be up ten straight days after tomorrow's close and I think there is a footprint here possibly of some very interested party ala the Cracker Barrel 9.8% positioning a short time ago. Since then JACK has risen consistently on pretty good volume. I suggested a while back that some private equity group could not go wrong positioning up to 10% of the stock between 20. and 22. Then they could tender at 26. and have a white knight up the ante as high as 30. The ultimate white knight of course is YUM Brands who could acquire the company in a stock transaction for say 30. a share which would be accretive. They also get two concepts not in their portfolio at present which they can expand nationally and internationally. What a no brainer and I am giving the idea gratis to any aggressive firm out there willing to initiate the process. We still own the cheapest stock in the group at 22. (the 26 page institutional research report of Morgan Stanley estimates 2.00 a share for the fiscal year ending about Oct. 1, 2012). The Qdoba and private equity kickers make this an irresistible situation. A real stock with a "story." Anyone short JACK (and there are 3.6 million shares short) is risking an awful lot with minimal downside potential. The irony of a short position in this case is that they prove to be their own worst enemy when eventually bidding up the shares in bail-out mode. Moreover, the company is aggressively buying back its own shares (the ultimate insider?), and this cap-shrink phenomenon should substantially reduce the outstanding share number in the years ahead in lieu of any buyout. So any way you cut it JACK is a winner.

    Big J in L.A. (back in the saddle again)

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