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Kona Grill Inc. Message Board

  • dcxavier dcxavier Nov 23, 2011 8:17 AM Flag

    Stock buyback

    Thought they needed cash for growth and remodeling. Apparently that's not going to happen. Looks like they are going to milk the franchise.

    Probably related, Robinow is leaving.

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    • I like the idea of buying back some shares at current valuations ($5 per share). The market is currently valuing the business on a per unit basis that is less than the company spends to open a unit.

      However I do agree that the company needs to use some of their cash to grow. Their G&A spending is too high as a percent of sales, but should decline with more units open.

      Kona appears to have pretty good unit economics – low cost of sales etc.

    • I agree that this buyback does not make any sense, and it appears that the market does not care, as the stock is not holding its gains as usual. The only thing that I van guess is that maybe management is planning on taking the company private. If there only 9.25 million shares now, after the buyback would only leave a little over 8 million.

    • A repurchase just does not make any sense. Why not up the repurchase by a bit more and spend all their cash position? Maybe they just want the ability to buy Mark Robinow's shares as wall as any other insider that wants to get out. Is must just be a front since actually using the cash would not be smart.

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