I still think the June Q comes up goose egg in the divy. Maybe a couple pennies at best. Still, it's going to get bad around here. The stock will fall into the $3s at some point over the next couple months.
Since purchasing Harris Teeter, KR has absolutely destroyed it, turning Harris Teeter into a low end pile of garbage. What used to be a high end shopping experience at HT is now anything but:
1. It's obvious they have drastically cut back the labor costs/hours and it shows, everywhere.
2. HT stores used to be kept so clean you could eat off the floor. Now? The floors are so dirty, all the time, that it creeps me out. It's just plain disgusting. The self check-out lanes are the worst. There is so much grime, dirt, filth on the scanners, all the time, that it makes me wonder what disease I am taking home with the food.
3. The isles used to wide, clear, made for easy flow and relaxed shopping experience. They have now crammed the entire store with displays, everywhere. You simply can not maneuver easily. If you're into bumper cars, HT is now the place to go.
4. The specials used to be on staples, frequently used items. Now? They only cut price on junk that you hardly ever purchase.
5. HT had a thriving email "VIC" program. Every week I'd find good prices on items I needed. Now? Again, just junk items. So much so that I can't recall anything I've bought off a VIC email in months.
6. The old employees, who had been there forever, are now gone. They've been replaced by younger, lesser paid people .... who just do not care.
7. Most of the printed signs in the store have been replaced with Kroger signs ... destroying the HT feel the stores had.
HT is now a disgusting, low-end shopping experience. I now shop more elsewhere, as do most of my neighbors. I suspect the financial results will soon reflect this fact.
KR is NOT skilled at consolidation and acquisitions. I know this from first hand experience. If you think otherwise, you are a fool.
Two quarters ago they had a $1 M cash reserve. Now ? Zero, Zilch, Nada, Nothing, Goose Egg. They used $500 K in each of the last two Qs to support dividend payment. You cranked that into your guesswork, yes?
You can buy the stock today for $17.95. That makes each right worth only .25. [17.95 - 17.20 offering / 3 rights per share]. Which means that every single right sold during the offering period is way underwater. The vast majority of the rights sold for between .46 and .52. They've lost 50% on that investment.
Seriously ... just who were these idiots that so grossly overpaid for the rights?
The rights closed at .45 each the last day of trading. The overwhelming majority of rights buyers paid more than .45 each over the offering period. What did they wind up paying for INF?
Well, it looks like the offering got priced off NAV, because 78% of the closing NAV on 5/22 was higher than 90% of the avg of last 5 days closing price. 17.20 greater than 16.84.
17.20 + .45 each for 3 rights = 18.55 per share.
So, rights buyers largely paid MORE than 18.55 per share. The sad thing about that? You could buy INF for less than 18.55 all day long the last 2 days of trading. Would you rather buy rights and have to wait a full week before you get the stock, or buy the stock cheaper and have the flexibility to sell if needed at any time this week? Looks like most people did the stupid thing.
Why? Why were the rights buyers so dumb? Is there something I don't see? Or, am I the only one who can follow a closed-end fund rights offering and know whether it's better to buy the rights, or buy the stock?
There are people out there paying more for the rights to get into INF, than they would pay to just go into the market and buy the stock outright. Stupid people are trading these rights. They don't get it yet that this deal will wind up being priced at 78% of NAV, not the avg of the last 5 trading days. Do your homework people.
40 cents per right *3 rights + 17.32 offering price based on 78% of NAV = $18.52.
Then, push the pencil around to determine the diluted NAV post offering and you get about $20.87.
Pay $18.52 on a $20.87 NAV and you get about 11.3% discount to NAV .... overvalued ... relative to similar closed-end funds like UTF, which sell at 12.5 - 13.5% discount to NAV.
Fair value in the rights? about 30 - 32 cents. If you're buying them now, you're overpaying. Pure and simple.