Your honor roll daughter (high school) has arranged her first date. You expect her to pick a spick and span clean boy at the same intellectual level as she. He shows up for the date. You wonder at the number of piercing metal objects in his nose. His hair is multicolor and mounded in an unnatural way. You thankfully see he is chewing gum line a cow: He will never find the time to kiss your daughter.
And so it is with DMND. Selling a share to PE is disappointing. Is that all we can get?
I would be surprised if all we get is a small PE deal.
I don't think that Diamond will exist as its own entity by the end of June.
Private equity is hungry for successful brands with huge growth (all greatly outperforming their respective markets).
The true value of these brands are about double what they are being valued at right now, if you take away the overhanging issues that will be resolved.
Barring any drastic new accounting issues (making this an Enron type fraud), the downside risk is baked in. It won't get much lower than it is, and I would be very surprised to ever see $22 again.
Even a small short covering like we saw the other day, leads to massive spikes.
These guys are pros, they don't care about the day to day stock price. Everybody is posturing and the vultures are feeding info to their friends at WSJ to constantly make Diamond look bad so they can get a better price.
The gig will be up soon however. Diamond got a good deal on Kettle and Pop Secret and are organically growing Emerald faster than any retail nut company in the industry. Of course the cash value of the company is over $1B, and its worth more to Kellogs who has the distribution in place to blow up these brands.