Doug,
>>The haircut it took a few months ago on concerns about same store sales declines was way, way overdone. First because first year declines are absolutely part and parcel of the category, except perhaps in hyper tourist locals.<<
Quite right however RAIN is also trading at a discount because nobody but a fool would trust the current management. They like to short-term trade their own issue. Buy low. Sell high. In that light last dec they were trying to do a convertibles offering (Sell high) for no apparent good reasdon other thantrhey thought the shareprice was too high. So they told the analysts they'y name a Pres in January because it was down to two finalists and then they announce they're comfortable with eaerning but apparently before they could sneak the offering in they had to announce that they really weren't going to make the earning estimates and by the way hehehe those two candidates for President fell through. Of course the shareprice was dropping for five days straight I believe before they announce the 'real story'. Of course the 'haircut' ensued. So then they resumed the "stock buyback via puts" they initiated in early 1997 as the Buy Low part of the program ( due to previous shareprice drop precipitated a steady procession of spindoctored bad news coming to light.
You know the saying goes Fool me once shame on you. Fool me twice shame on me! Well, Lyle's working on fooling a whole knew set of RAIN investors for the third time. I most sincerely doubt that a new President of any import will ever be named. If anything RAIN will fine some big name has been whose willing to be a Berman stooge for a fistful of options. Or he'll name Carey or Brimmer to the position. Then after the annual meetings over he'll have the board lower the strike price of his and the other stooges options. He'll do this because he thinks of his investors the same way he does his customers at his casinos. Make real comfortable, then give them a good shearing. And don't worry there's always another sucker where the last one came from.
Now Maybe berman will name a classy Pres and prove me wrong but I really really doubt it.
Here's an article on Lyle Berman that Bob Packman emailed me:
Subj: berman
Date: 98-04-01 15:11:22 EST
From: Rang1995
To: DENNISVAIL
Apr. 1 (Saint Paul Pioneer Press/KRTBN)--Rainforest Cafe Inc.'s top executive, Lyle Berman, got a giant stock option grant last September potentially worth millions of dollars -- his first compensation since the firm was created four years ago.
But the options on 450,000 shares are currently underwater, since Rainforest's stock tanked just a few months after Berman got the grant.
The options are priced at $21.42 and expire in 2007, according to reports filed Tuesday with federal securities regulators. That means Berman can buy the stock at $21.42, even if Rainforest's stock is priced much higher.
The 450,000 option shares would be worth as much as $15.4 million if Rainforest's stock appreciates 10 percent annually, the report said. Berman can begin exercising the options in September, a year after they were originally granted.
But right now Berman's options are underwater by $6.42, since Rainforest is trading at $15.
Hopkins-based Rainforest had traded as high as $25.42 in November, but then dropped precipitously in January after the company disclosed lower earnings projections and an 11 percent decline in same-store sales. The stock hit a low of $10.75 in January.
In the wake of the stock's fall, Rainforest was hit with shareholders' lawsuits claiming the company misrepresented or left out material facts, resulting in an inflated stock price.
Chairman and CEO Berman is Rainforest's largest shareholder, and he provided the money that got the company off the ground. Rainforest's compensation committee said it awarded Berman the grant because "it believed it is in the best long-term interests of the company's shareholders to provide incentives to Mr. Berman."
The compensation committee's two members, David L. Rogers and Joel N. Waller, are executives at Wilson's the Leather Experts, a chunk of which Berman also owns. Berman sits on Wilson's board, too.
Berman's other main business interest is Grand Casinos, a firm he founded and for which he currently serves as chairman.
Last year, Berman angered some Grand shareholders when Grand repriced 1 million stock options for Berman after Grand's stock sank. The options were repriced from $32 apiece to $11.
By Mike Hughlett
Visit PioneerPlanet, the World Wide Web site of the Saint Paul Pioneer Press, at pioneerplanet.com
(end repost)
Regards,
dennis
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