Landry's Restaurants Deal in Question
Recent tightening in the credit markets is putting the
$21-per-share takeover deal in jeopardy.
Apparently, Landry's CEO Tilman Fertitta may not be able to find funding to complete his takeover of the company at $21 a share, and is in talks with Jefferies and Co. to get financing for a deal at a substantially reduced price.
The company itself has felt the effects of the weak economy and consumers cutting costs. The company also operates The Crab House and Rainforest Cafe restaurant chains.
We mentioned the arbitrage risk that is in the market and have removed the names we had been recommending from our "Recommended" list. Investors in these shares should not be surprised if the deal gets done at a price that is considerably under the $21 price. We would look elsewhere for better opportunities.
Landry's Restaurants is not recommended at this time, holding a Dividend.com Rating of 3.0 out of 5 stars.
General Growth Properties Insiders Bet Wrong, to the Tune of $588 Million
Wall Street Journal
included an amazing article about the big bet that company insiders made on
General Growth Properties
The article states that founders of General Growth Properties -- with the help of a $588 million dollar loan from
-- acquired 12.5 million shares earlier this year -- that's over $47 per share of GGP. Despite the stock's recent drop to $5 per share, the Bucksbaum family has not had to repay the debt yet, according to a source familiar to the matter.
The $588 million question is why Citigroup would want any part of this type of loan, when Citi itself is struggling to pay off $27 billion in debt. Unless Citi is first in line on any property liens, which is very unlikely, this case is another example of bad execution on the banking side. We have been avoiding shares of GGP -- and would look elsewhere for better opportunities.
Costco Sees More Shoppers, but Earnings Just In Line
delivered an in-line earnings report, as price-conscious shoppers flocked to the discount retailer for bargains on food and gasoline.
The company's revenue jumped 13% to $22.6 billion -- excluding membership fees -- which rose to $473.7 million from $388.2 million.
Back in July, the company warned that soaring energy prices and inflationary pressures were driving up the cost of doing business -- and that it would not be able to meet the $1 EPS estimate at the time. EPS came in at 92 cents for the quarter. Same-store sales did rise 7% -- but that was slightly below what Wall Street was expecting.
We had removed Costco shares from our "Recommended" list back on Sept. 22 -- when shares were trading at $66.09. We felt the company is in the right retail niche -- but the risk/reward was not favorable at those price levels. The company has a low dividend yield of 1.00%, based on last night's closing stock price of $57.80. We would hold still off on the shares for now, and wait for a better entry point.
Costco is not recommended at this time, holding a Dividend.com Rating of 3.4 out of 5 stars.
Alcoa Shares Fall on Disappointing Earnings Results
just reported its third-quarter profit dropped 52% -- but the good news is that company has decided to suspend it stock repurchase plan.
The earning miss is not a surprise, considering the massive inventory builds and aluminum prices that have dropped 32% from an all-time high in July. With exposure to weak sectors like the auto industry and commericial building, any snapback in aluminum prices may take a long time to materialize.
Alcoa shares are down over 15% in early trading today.
We are happy the company is halting its stock repurchase plan, instead of cutting its dividend. We removed the stock from our "Recommended" list back on July 2 -- when shares were trading at $32.11 a share. We think the shares have gotten much more attractive at current levels -- but we would like to see the stock settle in a bit -- before committing any capital. The company has a 4.07% dividend yield -- based on last night's closing stock price of $16.71.
Alcoa is not recommended at this time, holding a Dividend.com Rating of 3.2 out of 5 stars.
At the time of publication, the author had no positions in stocks mentioned, although positions may change at any time.
Tom Reese and Paul Rubillo are senior editors of Dividend.com. Visit Dividend.com for more dividend stock ratings, picks, news, and analysis for long-term and income-seeking investors.