I'm not convinced by this story, but I do worry that if medallion prices drop and interest rates rise, TAXI has its NIM squeezed and does a lower volume of business. I.e. margins/revenues may not be sustainable.
This is basically a bank that lends long borrows short.
Any idea how well they've managed their interest rate exposure? If short term rates rise to more than 3.5%, there will basically be no NIM, and this will be hemorrhaging money, though it might improve the credit performance of the mezz loans.
Is this legally required? If not, it is a bit of a red flag, as companies that tout their own stock price often ignore their core business.
There are a variety of good reasons why people would want to sell, even as the company wants to buy.
For instance, incentive compensation at the company may be tied to the stock price...
My guess is that they won't get over 25%, and won't take this private.
I think they'll push faster for international expansion, line extensions, etc. They'll throw the original lulu moms under the bus and position it more as a poser yoga brand that would be perfect for VFC to take out at $60 or so.
I've got no position on the company now. Was short for a while (too early, as it turned out).
My reading of the deal is as follows:
Chip was shooting his mouth off, and more importantly, was threatening to sell his stake on the market, which would have tanked the stock. Chip was also behind a slower growth strategy where the brand would stay 'true' to its heritage.
Advent knows the company well, and found this an easy way to buy a large stake in the company. They'll push a rapid expansion, but they may dilute or reduce the brand's image and long-term staying quality. My guess is that Advent will hope to juice sales quickly then dump their stake on all the momos.
The 450mm buyback is to give Chip liquidity. It takes out roughly 10-15% of his shares and gets him below 30%. He's been threatening to sell them on the market.
But the projections were way down. US market is saturated. Plenty of competition; stores are beginning to cannibalize each other (and are already in the best spots). Scarcity formula is wearing thin, and, at some point, there are only so many CRB colors and waistbands that you can stick on the clothing.
The error in your logic, as I've been pointing out for 3 years, is that once every girl had 1 or 3 pairs of yoga pants, there was nobody left to sell them to.
The real issue is that LULU's current customers would be put off by a more corporate branding that attempted to triple sales, and VF already has a strong play in yoga pants.
VFC could pay $50/share and have it be accretive if they can preserve margins and grow sales from $1.6- 3.6b.
Given that LULU can't do this, I'm not sure why VFC could.
Almost all chips shares, and he's filed to sell a lot. Look at SEDAR. Also, no longer on the board. Christine Day sold everything in the 80s, as did the cfo.
Both of you are totally uninformed: Chip Wilson still has significant holdings. All the other executives have nearly zero and sell it as fast as they can.
The true test is whether they exercise options and sell them immediately or let the options ride. In the past, they've unloaded as quickly as possible. Either way, they've got very little skin in the game.