gj62:
Genesis - while I agree this may not be in the direct interest of shareholders, at the time they made their bid, the stock was at $17. It jumped $2 on this news.
Now, I don't understand the traders that bid up a stock over the $18 value when the bid specifically said it was non-binding and that the company would not entertain other offers.
I think they could get into trouble if they truly did not accept a valid 3rd party bid over the $18 bid price - but they are also unlikely to get one...
Doesn't matter at this point if they get one, if a few large shareholders decide to get nasty about this. The argument they could make is that the statement of refusal to consider other bids was
designed to damage the market value of the company and hold its price artificially low so the inside transaction could take place.
That sort of thing can get ugly FAST if some institutional shareholder decides to play nasty, or if some landshark specializing in securities fraud smells blood. BTW, there are rumors floating around on message boards that shareholders are organizing already in an attempt to mount a legal challenge..... Who knows what kind of legs that has.
Inside dealing to board members is one of those things that can get you in
big trouble if the transaction you propose doesn't pass the "sniff test." The test is whether an
outside party, with no relationship, would be able to do the same deal. If not, then you've got a problem.
The whole concept of "friends and family" goes straight out the window when you're running a public firm. A LOT of what you'd
like to do is simply off-limits in a public company, from disclosures you'd like to make to "best friends" (but not anyone else!) to private sales and purchases of various things. Anything is subject to question at any time by any of the shareholders in a corporation - and if you can't defend your actions as reasonably in the best interest of the shareholders in general, rather than who you dealt the inside straight to, you're gonna get cooked.
A bald statement that you won't listen to any other offers and this is a "take it or leave it", from
inside the board, is IMHO pretty insane coming from a public company, as it verifies that you were dealing off the bottom of the deck.
I've been around plenty of public and private corporations in my years. That press release raised my eyebrows when I saw it.... and not much does these days.
BTW, the company is not doing all that well, from my read of the financials...
"The maker of outboard motors, canoes and tents earned $5.4 million on sales of $315 million in fiscal 2003 compared to $7.9 million and $343 million the previous year."
They are only earning 1.7% for '03, .vs. 2.3% in '03. That's a 25% decrease in earnings margin, and a ~10% decline in operating revenues.
Looking at their balance sheets their SG&A is outrageous, and they are spending basically nothing (1%ish of revenues) on R&D.
That's pathetic, and says they've got nothing in the pipe. That be how you get your lunch eaten!
Even worse, they're revenues are down sequentially from 01-03 for both years; this is not good. They also took a big charge in '02.
Finally, the EU
did look into their competition policies in Europe. They took no action - but that was based on today's posture. If they start playing games with their dealership structure, that may well change. The EU is
very pro-competition, and things you can get away with over here don't fly there - indeed, they throw people in
jail for things our regulators just fine folks for.
I see nothing in the company's financials that look promising at all.
Indeed, what I see is a business in trouble, where even very small further declines in sales volume could have disasterous consequences in terms of profitability.
http://finance.yahoo.com/q/ir?s=JOUT
Their balance sheet shows ~$60m in cash. Sounds like a lot. But they're owed that much, and have that much again in inventory. Those are
high numbers, IMHO. I'd love to see some quality numbers on those receiveables and inventory aging, but that's beyond what's filed on a 10K or 10Q.
Even more troubling, there's $50m in Accounts Payable - and another $15m in current (due w/in 12 months) debt. It appears they're paying down some of their long-term debt - good, given that their business appears to be deteriorating!
I don't particularly like their cash flow statement either.... but that's me.
This is, in my analysis, a hand-to-mouth business. If the sales dried up they'd be hosed in very short order - months. Their current cash balance would barely cover their existing payables. If the entire place went away tomorrow, you'd have physical plant. Not all that good. While their current ratio is ok, they've got a deteriorating position - and a lot of what that current ratio is based on is predicated on non-fungible assets.
If Helen and friends want this pig, they can have it. Putting lipstick on a pig still leaves you with a pig. I wouldn't buy the shares on the open market, and I don't own any, so there 'ya go.
Perhaps Helen and her family don't like all this being out there where we can see it? A private concern doesn't have those pesky 10Ks and 10Qs to file, which make glowing statements at sales meetings tougher to square against the balance sheet - since you can't see it....
I see a business with declining sales and shrinking operating margins, effectively zero R&D, and a balance sheet that has trends in it that make me nervous.
All the rah-rah of a sales meeting doesn't change the public results of operations.
Any business that only makes 1.7% and is losing 10% of its revenue annually isn't doing very well. All the claims of how "wonderful" their dealer base is, and how enthusiastic it is, is overlaid by the actual operating results.
This ain't investment advice, as I ain't an investment professional - just a guy who invests his own money. YMMV.
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