Hi Keith,
Great post!! I don't know as I have any answeres to you questions either but I'd like to comment on some of them.
>>>3) why a 13-point drop, when the revised fundamentals might have suggested a correction of less than half that amount?...<<<<
>>>>>11) do I trust Mr. Berman with my money?...<<<<<<<<<
Here is head and tails on the same question. A little history lesson, in late Sept of 1996 RAIN had an offering of 3 million shares (the second offering in 1996 and some felt it was an unnecessary offering I may add) which was preceded by tremendous hype. One month and a half later the COO/president Martin O'Dowd left on a leave of absence for "personal reasons" and ultimately resigned in late April. Shortly after O'Dowd's leave of absence RAIN admitted expenses for developments at two proposed icon units would have to be written off and the openings cancelled. Plans to open another proposed unit in Philadelphia were also cancelled. It's hard to believe these "little negatives" only came to managements attention after the offering. When RAIN finally announced in January that sames store sales were off at Woodfield by 14% in 4Q and a month or so laterr announced delays in some of the 1997 openings the shareprice completed its descent from 36 and change to 17 and change. However from late April on the shareprice steadily rose as opening began occuring on a timely basis and earnings were met or exceeded and the company announced O'Dowds departure and the hunt for a new COO. All was going swell until very unexpectedly RAIN announces another offering even though the very S-3 RAIN released stated RAIN wouldn't need any money until after 1999. Boy, as Yogi Berra would say, deja vu all over again. I personally felt that RAIN's management couldn't be stupid enough to try to conceal weakness until they could raise money on the convertible offering but there you go . Fool me twice shame on me. I really cannot believe that the CFO was confortable with 4Q earnings given the new management system mentioned in the 10Q and S-3 that can report accurate unit by unit sales on a weekly if not daily basis. Nor do I believe that RAIN had narrowed the candidates to two with the announcement of the finqalist coming in January as I hear Kinnard was telling its clients and which Brimmer nows says happenned but the candidates didn't work out. It seems more likely RAIN (Berman) never had any attention of hiring a restaurant man to run this great concept but prefers to run it himself as a neglected child to his number 1 company GND Casino's with a bunch of capable capable VPs running the company by "camel" the 77% of the time he's not there. The other possibility is even more heinous that NO TOPNOTCH CANDIDATE would take the job given the conditions Berman, the runner up this year in the Las Vegas World Series of Poker, was offering. I would take that to be less that full control of the company. Hopefully not fundamental problems the candidates saw in the company. The question is, does anybody really think this company will even come close to realizing its earning potential in the future without an experienced restaurant man is the top spot. ( As RAIN's S-3 states Brimmer has no restaurant experience whatsoever)
Anyway in my book the lack of credible and experienced leadership is costing about 9-10 bucks short-term and in the long run it will be..............a....... whole......lot......more.....
But don't worry yourself about Mr. Berman, as Gary Friedman, one of GND's larger shareholders and the resident MF Guru on the GND boards (Goodguygar is his nom d'plume) claims that Berman often write calls on his shares in his companies, controls shares in his companies in about 10 different accounts, and as a documented fact Berman sold a million shares of GND right before it plunged from a high in the 30s in Spring of 1996 to its current range in the low teens. If your interested in Gary's latest take on Berman and RAIN he also posts on the SI GND thread:
Message 3116620
Regards,
Dennis
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