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Will price double for Tim Hortons IPI this week (like Chipotle)?
- Thread starter canadian_dude
- Start date
Quote from The Kin:
^ link?
If you don't have a copy of Wendy's Anuual Report:
http://www.wendys-invest.com/fin/annual/2005/wen05ar.pdf
Use search function for the term "Hortons."
Here are some numbers to chew on.
Dunkin' Donuts (and its sister companies) were bought recently in a private deal for $2.43 billion. That represented 12,000+ store locations.
Tim Horton has less than 3000 locations and the 18% stake they are selling is priced at more than $700 million, meaning the company is being valued at over $4 billion.
Is Hortons really worth double what Dunkin is worth when it is only 1/4 the size? I highly doubt it.
This is the most hyped IPO of the year and 65% of Canadians polled said they would consider buying shares. So it will probably open high, go higher, and then tumble.
Dunkin' Donuts (and its sister companies) were bought recently in a private deal for $2.43 billion. That represented 12,000+ store locations.
Tim Horton has less than 3000 locations and the 18% stake they are selling is priced at more than $700 million, meaning the company is being valued at over $4 billion.
Is Hortons really worth double what Dunkin is worth when it is only 1/4 the size? I highly doubt it.
This is the most hyped IPO of the year and 65% of Canadians polled said they would consider buying shares. So it will probably open high, go higher, and then tumble.
Is it worth double? Ten Mercedes are worth at least as much as 40 cars costing only 1/4 as much as each Benz.Quote from canadian_dude:
Here are some numbers to chew on.
Dunkin' Donuts (and its sister companies) were bought recently in a private deal for $2.43 billion. That represented 12,000+ store locations.
Tim Horton has less than 3000 locations and the 18% stake they are selling is priced at more than $700 million, meaning the company is being valued at over $4 billion.
Is Hortons really worth double what Dunkin is worth when it is only 1/4 the size? I highly doubt it.
This is the most hyped IPO of the year and 65% of Canadians polled said they would consider buying shares. So it will probably open high, go higher, and then tumble.
What are you getting for your money? Which one has the higher revenue/profit per store? Hortons has a lot more than coffee and donuts in its product line.
Any one who has traded IPOs for a living will realise the futility of trying to gauge exactly how an IPO will open. IPO trading is a numbers game rather like Long Term Trend Following. You have accounts with the major houses and you indicate interest in almost everything on their calendar, good or bad. You often know how a deal smells before it opens. Tim Hortons is obviously hot. A bad deal can often be smelt in the fact that it is delayed, the range is reduced, the size is reduced or it is priced at the mid or lower end of the range.
Few professionals are in there for the long term. Many of even the biggest fund managers out there flip the stock at the open come hell or high water. And statistically, by doing so, they will profit.
But the game has changed a lot over the last 5 years. It is no longer a stand alone business model. Certainly in the US market the opening premiums over the past few years have been under 10% as opposed to more like 100% in the days of the internet boom in the late 90s.
This makes it very difficult for the smaller player to feed enough commission to the brokers to ensure meaningful allocations of hot deals. Hedge funds and long only fund managers have a natural flow of business which ensure they will receive some allocation in most deals and thus they can boost their overall returns. But only fractionally these days.
IPOs were once a license to print money. Maybe they will be so again some day. Convertible bond arbitrage was once one of the lowest risk ways for hedge funds to produce high and consistant returns with low volatility and drawdowns - but the rules changed over the last couple of years. Financial markets change.
Change is a fact of life. An immutable rule of the cosmos, like entropy, like the fact that time's arrow only moves in one direction.
So don't waste your time dithering over the whys and wherefores. Get as much Tim Hortons as you can. Sell at the open or after a few days or weeks. Enjoy the ride. And then move on to next week's deals without a second thought and don't look back. Sure, on some occasions you would do better to sell at the open, or short the stock or hold for a few months. But you need rules and you need to stick with them. Successful IPO trading is 90% mechanical.
Few professionals are in there for the long term. Many of even the biggest fund managers out there flip the stock at the open come hell or high water. And statistically, by doing so, they will profit.
But the game has changed a lot over the last 5 years. It is no longer a stand alone business model. Certainly in the US market the opening premiums over the past few years have been under 10% as opposed to more like 100% in the days of the internet boom in the late 90s.
This makes it very difficult for the smaller player to feed enough commission to the brokers to ensure meaningful allocations of hot deals. Hedge funds and long only fund managers have a natural flow of business which ensure they will receive some allocation in most deals and thus they can boost their overall returns. But only fractionally these days.
IPOs were once a license to print money. Maybe they will be so again some day. Convertible bond arbitrage was once one of the lowest risk ways for hedge funds to produce high and consistant returns with low volatility and drawdowns - but the rules changed over the last couple of years. Financial markets change.
Change is a fact of life. An immutable rule of the cosmos, like entropy, like the fact that time's arrow only moves in one direction.
So don't waste your time dithering over the whys and wherefores. Get as much Tim Hortons as you can. Sell at the open or after a few days or weeks. Enjoy the ride. And then move on to next week's deals without a second thought and don't look back. Sure, on some occasions you would do better to sell at the open, or short the stock or hold for a few months. But you need rules and you need to stick with them. Successful IPO trading is 90% mechanical.