From Colt to Bebe

One of my telecom takeover bets was Colt Telecom, the European telco service provider. Colt is still independent, but it decided a while ago to delist its NY-listed ADRs, paying approximately market value to shareholders. Net, I made a small profit, but as a percentage gain, it is tiny.

I received the cash last week. I will be putting all the proceeds into Bebe (BEBE), which I have mentioned in the past (here and here) as attractive targets. I have been waiting for a good entry point, and the recent pullback, more than 50%, provides just such a point.

As Bebe works on its turnaround, it could either be bought, or the founder, who already owns 75% of the company, may decide to take it private. I expect to see a premium of atleast 25% in either case. Bebe has around $300 million in cash, with practically no debt. It also yields around 1.3%, which should make it a comfortable hold in the event that the only positive exit point is post-comeback, something that can take a year or more.