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“The $10 ceiling is an important consideration for current and potential unitholders insofar as it could be a poor entry/accumulation point. However, whether QSR trades at $9, $10, or $11 a unit our opinion that the trust represents an attractive mix of risk and reward is unlikely to change.” Mar 2, 06
With Priszm at $10.45 per unit the above comments stand. However, and as noted in our 1Q06 Wish List comments, “We would not be buyers above $10/unit”. Priszm remains on the Wish List as an ‘income investment’, but the most appropriate word of the day is ‘hold’.
Although there has been no fundamental change in the business (the seasonally strong summer period is just about to begin), we would nonetheless consider selling our position in Priszm at or above $11 per unit. Assuming four monthly distributions on the books, at $11 the total return on Priszm since we selected the trust would be more than 20%. Notwithstanding the near term investor optimism relating to acquisitions and solid distributions (currently being funded with debt), it would be difficult to turn down a 20% gain if it arrives before the company accomplishes anything from a financial perspective in 2006.
With HNZ above $40 today, our previous speculations about a notable ‘breakout?’ (gif) proved accurate. Similar speculations can be made as Priszm’s units bust above $10. And yes, Priszm units have probably benefited as the dark regulatory days encompassing the entire Canadian trust industry have rescinded.
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Companies Vanishing
While thumbing through some older company lists yesterday, we came across an interesting collection of companies under the file name ‘STOCKS TO CHECK’. This list was compiled in early 2005, and it highlighted what we believed to be some attractive companies with unattractive stock prices. The four companies on the list were FIZ (added and removed from the Wish List in 05), RML, MYG, and LANC. Given that Russell was recently taken over by Buffett, Maytag was taken over by Whirlpool last year, and National Beverage Company has been performing exceptionally well in recent quarters, this leaves Lancaster Colony Corp.
Lancaster is a remarkable company with attractive cash flows. And although shares appear to be fairly priced, the way the takeovers are flying today you never know what someone may be willing to pay. A takeover of LANC and the file in question would quickly be renamed to ‘look at FIZ on weakness’.
Another list that is likely to see companies vanish in the future is our recently constructed utility stock takeover list (Excel). Yesterday Northwestern agreed to be taken over by Australia's Babcock & Brown Infrastructure for $2.2 billion. Previous offers from Black Hills Corp. and Montana Public Power Inc., which were rejected by Northwestern’s board for being too low, have, in hindsight, proven to be just that. 1 company down, 29 to go.
Other Developments
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