yeah, Bassoul bought $10M when he took over if I recall correctly, and there's been more insider buys since.
my one note of caution would be that it's in these kinds of situations when I'm often least confident in insider buying. It's basically a vote of confidence that the strategy will work — but in *all* of these cases managers are already confident they'll fix the problem. whether they buy more stock or not.
By and large these are men and women with massive egos (not necessarily a criticism, just a statement). I think Bassoul's track record at Middleby is enough on its own; the insider buying is helpful but less of interest to me than it might be in other situations.
As I was reading your report I wondered about what sort of affect the big spike in gasoline was having on attendance. I remember Six Flags Atlanta was quite a long drive west of the city. And I bet your typical Six flags visitor is not one for driving a fuel efficient car.
So if that's the case, then I wonder how much of that demand is there to snap into the current quarter or whenever fuel prices finally subside. Perhaps gas is already cheap enough to draw in some of those delayed visitors.
Yeah, but in Q2 the theme park industry was pretty strong overall. Customers were willing to pay that "tax", for lack of a better term, to go to Cedar Fair. Going to Disney was significantly more expensive than in Q2 2019, between airfares/gas, hotels, rental cars, and the actual ticket price....customers happily paid up there.
The problem was/is that SIX isn't getting enough of those customers. The bull/bear debate really is over why that is. I'd argue it's because of fixable problems. The bearish retort is that the parks simply aren't as good, whether because of the rides or the lack of IP relative to Disney/Universal in particular.
Lower gas prices definitely help in Q3 and maybe beyond. But I don't think $4-5 gas was the problem in the most recent quarter - SIX just didn't execute on its plan the way it wanted to. I think that will get better.
thank you for highlighting that, meant to mention that in the piece...higher interest rates aren't necessarily a huge headwind. The 7% 2025s, for instance, are actually trading above par. Weighted spread for the rest of the debt is ~100 bps or so. If you assume they refi at current prices, after tax, increased interest expense is probably 3-4% of pre-pandemic free cash flow. It's manageable.
There's been an awful lot of insider buying too.
yeah, Bassoul bought $10M when he took over if I recall correctly, and there's been more insider buys since.
my one note of caution would be that it's in these kinds of situations when I'm often least confident in insider buying. It's basically a vote of confidence that the strategy will work — but in *all* of these cases managers are already confident they'll fix the problem. whether they buy more stock or not.
By and large these are men and women with massive egos (not necessarily a criticism, just a statement). I think Bassoul's track record at Middleby is enough on its own; the insider buying is helpful but less of interest to me than it might be in other situations.
totally agree re. not reading too much into IB here.
on the other hand, at least they believe it... it could be worse.
As I was reading your report I wondered about what sort of affect the big spike in gasoline was having on attendance. I remember Six Flags Atlanta was quite a long drive west of the city. And I bet your typical Six flags visitor is not one for driving a fuel efficient car.
So if that's the case, then I wonder how much of that demand is there to snap into the current quarter or whenever fuel prices finally subside. Perhaps gas is already cheap enough to draw in some of those delayed visitors.
Yeah, but in Q2 the theme park industry was pretty strong overall. Customers were willing to pay that "tax", for lack of a better term, to go to Cedar Fair. Going to Disney was significantly more expensive than in Q2 2019, between airfares/gas, hotels, rental cars, and the actual ticket price....customers happily paid up there.
The problem was/is that SIX isn't getting enough of those customers. The bull/bear debate really is over why that is. I'd argue it's because of fixable problems. The bearish retort is that the parks simply aren't as good, whether because of the rides or the lack of IP relative to Disney/Universal in particular.
Lower gas prices definitely help in Q3 and maybe beyond. But I don't think $4-5 gas was the problem in the most recent quarter - SIX just didn't execute on its plan the way it wanted to. I think that will get better.
High quality business but given the leverage it seems like a bet on interest rates more than anything
thank you for highlighting that, meant to mention that in the piece...higher interest rates aren't necessarily a huge headwind. The 7% 2025s, for instance, are actually trading above par. Weighted spread for the rest of the debt is ~100 bps or so. If you assume they refi at current prices, after tax, increased interest expense is probably 3-4% of pre-pandemic free cash flow. It's manageable.
Thanks. I really like the idea... a way to bet on a Fed pivot, if nothing else
Fed pivot concept lasted about 2 weeks there it seems.