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Tooting My Stock Predicting Horn

Back in August 2007, I gave a NexCen Brands an “I wouldn’t buy it” rating after they grossly overpaid for the Pretzel Time and Pretzelmaker acquisition by paying 5x revenue.  At the time the stock price was around $7…fast forward 2 years and yesterday it closed at 36 cents and has been as low 5 cents in 2009.Your welcome!

About Ryan Knoll

Attorney and advisor with an interest in franchising. Feel free to email me comments and questions on the "Contact Us" page.

10 comments

  1. Great call Ryan. So what is your prognosis going forward? Buy, Sell, or Hold?

    Curious,

    FuwaFuwaUsagi

  2. Ryan, I would be more impressed if you had actually shorted the stock in August of 2007!

  3. [quote comment=”573271″]Ryan, I would be more impressed if you had actually shorted the stock in August of 2007![/quote]
    Me too 🙂

    I used to trade stocks very frequently but in the past five years with kids and work competing for attention I’ve been almost exclusively in mutual funds with the occasional commodity ETF or I’m sure I would have pulled the trigger on Nexcen.

  4. [quote comment=”573211″]Great call Ryan. So what is your prognosis going forward? Buy, Sell, or Hold?

    Curious,

    FuwaFuwaUsagi[/quote]

    I’d have to look at their financial statements to see where there basis stands. I suspect they’ll be taken private in an MBO to avoid the six-figure compliance costs of being public and to further cut costs. Their intellectual property with Athlete’s Foot and their QSRs are valuable, and with 1,800 franchised stores delivering a steady fixed income, I think they’ll survive fine and be able to attract structured financing for a management buyout.

  5. [quote comment=”573211″]Great call Ryan. So what is your prognosis going forward? Buy, Sell, or Hold?

    Curious,

    FuwaFuwaUsagi[/quote]
    By the way, FuwaFuwaUsagi, I’m sending you an email later today on something I’d like your opinion on.

  6. [Quote]

    I’d have to look at their financial statements to see where there basis stands. I suspect they’ll be taken private in an MBO to avoid the six-figure compliance costs of being public and to further cut costs. Their intellectual property with Athlete’s Foot and their QSRs are valuable, and with 1,800 franchised stores delivering a steady fixed income, I think they’ll survive fine and be able to attract structured financing for a management buyout.[/quote]
    [/Quote]

    I concur with your assessment of the IP, that is why this got on my radar. What type of premium is normally associated with a leveraged buyout on a penny stock like this? I would assume we are talking pink sheets here.

  7. [Quote]
    By the way, FuwaFuwaUsagi, I’m sending you an email later today on something I’d like your opinion on.
    [/Quote]

    I am going to the airport again, but I’ll look for it when I get to the hotel.

    FuwaFuwaUsagi

  8. Guys, it would be sort of fun to do a joint blog on Stock or Store – should you buy the stock of a franchisor or should you become a franchisee.

  9. [quote comment=”573467″]Guys, it would be sort of fun to do a joint blog on Stock or Store – should you buy the stock of a franchisor or should you become a franchisee.[/quote]
    That would be interesting…

  10. I think the decision tree to invest or franchise, as a generalized idea, would be interesting before “we” even discussed an individual offering. And I am not sure “we” would ever get there without a lot of caveats.

    For example I am of rather firm conviction that unless your income and immediate prospects fall below the mean for a person with a 4 year college degree, and you do not possess a 4 year college degree, you should strongly consider obtaining a 4 year degree. An examination of the risk profile, even with opportunity costs is very compelling.

    Once you get beyond the median earning for a college graduate the situation changes. However I think you must factor that in, in terms of opportunity cost.

    Then you need to consider your risk exposure for the return you anticipate? Any of you willing to step away from your current income stream, to become an owner operator and taking on a personal guarantee?

    Anyways, these are off the cuff comments of a handful of points in a decision tree I think need to be prudently considered before you even arrive at considering an individual offering.

    Probably a very good topic as a preliminary to what you guys suggested.

    All the best,

    FuwaFuwaUsagi

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