Wednesday, February 28, 2007

Hit #148 (Smith & Wollensky)

Smith & Wollensky (SWRG) accepted a $80 million offer from Patina Restaurant Group. The cash offer, of $9.25/share, makes for a gain of 75.5% over my average cost of $5.27. This position was a relatively recent one, compared to others where I had to wait for a long time for a buyout with such a large gain.

Smith & Wollensky earlier last month got an offer of $7.5/share from Landry's, but rejected it. I mentioned just last week that the stock continued moving up for some reason - well, it seems like somebody knew!

I will be looking at sectors other than restaurants to reinvest the proceeds. Most of the remaining public competitors are expensive. In fact, given the consumer downturn ahead, they may even make for good short candidates. But watch out for buyouts to upset short-selling strategies - Applebee's short sellers must have learnt a bitter lesson recently when it announced that it is looking for a buyer.

Previous hit - Wild Oats (#147)


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