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Cedar Fair, L.P. Message Board

  • fuzzhead72 fuzzhead72 Feb 19, 2011 7:06 AM Flag

    debt, dividend

    I owned a decent number of shares of FUN, back until I heard a company had offered to take it private. At that point I had been "stung" by this 'taking private' bug one too many times, as in deprived of long term profits by someone taking the company I had invested in private. I sold all of my shares, assuming it would go through at far less than the true value of the shares. I like to buy "value" stocks at depressed prices. I think I got out at less than $10, assuming the deal would go through.

    That didn't happen, evidently, and now I find myself looking at the stock again. However, that HUGE amount of debt is really making me pause. I see people asking for a larger dividend, and I'd really much rather see talk of paying down the debt instead, which would truly help the long term growth and profitability of the company.

    Any thoughts?

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    • I also did the same as you. My reason for selling my shares was that I lost all faith in the leaders of the company. they did not seem to have the investors interest at heart. I find myself also looking at this stock again. I still feel that a huge correction will happen in the near future.

      Until that event happens I will just keep an eye on FUN.

    • From my 25 years of investing in stocks, to be a successful value investor you must buy quality stocks when blood is running in the streets and everything is going to hell in a handbasket.

      I don't think FUN is a quality stock after they loaded the company up with debt to buy Paramount parks and Geauga Lake.

      At this point in time it is probably better to look at other investments or wait for some major world calamity to cause the stock market to fall.

    • What's the fair value of a junk stock in a very mature industry, showing no organic growth for the last 5+ years, with a ton of debt (leverage ratio 4.3), having a management team with (at least) 2 major strategic blunders in the last 5 years, offering a mere 32c yield? If you come up with a number greater than $5/unit, please show your work & assumptions.

      Remember, all stocks eventually revert to their intrinsic value, no matter how far momentum carries them in the other direction.

    • Before deciding to buy back in, I would ask myself these questions:

      1. Assuming from context that you sold at a loss, why would you opt to sell at a price significantly lower than the buyout offer of $11.50/unit? The unit price spiked when it was announced and hovered near or above that level almost continuously thereafter.

      2. Why are you looking at it again now--after an $8.50/unit run up in the price? It seems to me that FUN truly WAS a "value" stock around the time you bailed out.

      ...and most importantly:

      3. Based on Q's behavior to date and, more importantly, the outcome of the recent proxy vote on Proposal #2, how likely do you think it is that Q Funding will be successful in derailing the company's debt repayment plan?

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