RBD - Restaurant Brands

[castelinop]

I am enjoying the ride up with RBD and have no complaints. My view is that the prospect for RBD's long term future is positive.

[gregrday]

Hey guys, just written a quick blog post re: RBD, check out gregnz.wordpress.com.. Its the first part of my evaluation, which will lead to a assessment sheet based on valueline (check out the one I did previously for Michael Hill for an eg).

Hope it ends up useful!

cheers
Greg

[Snoopy]

Hey guys, just written a quick blog post re: RBD,

I noticed you got through your entire RBD blog without mentioning reading the chicken entrails Greg! I am not sure that is acceptable in this forum (which is why you posted 'over there' I suppose).

Seriously though, what are all the Grans and Gramps going to do when they realise the rules at the bank have changed and they see those 6 and 7 percent term deposit rates they had banked on to fund their golden retirement are no longer available? Will 4 to 5% cut it? Are there any finance companies left that can pay more than that without serious risk of capital loss? Perhaps the idea of an established income share paying a 5% steady return as a way out of poverty street has some merit?

SNOOPY

[gregrday]

Ah, reading entrails is part 2 of my report... as is doing a reading of the remains of a double-cream super frothed lime flavoured frapuccino with chocolate sprinkles and extra cream. ie, a starbucks coffee.

I also worry about people sitting on term deposits with low rates, and not really seeing the sharemarket as a viable alternative. I know people say "the sharemarket is not for everyone", but... I disagree. Everyone should have some exposure to shares, but... Im not much of a believer in index funds, and I am a believer in no free lunches, so I'm not sure what the grans and gramps will do. But a RBD, with prospect of some further upside and a fairly solid looking dividend should be thought about at least!

In my opinion, everyone in the country should own at least 1 RDB share, in order to get an invite to the AGM. There, you get free pizza and KFC, which, if converted into a 'dividend' would be about 300+% per year, given that everyone can eat $10 worth of pizza and kfc. Thats smart investing!

cheers
Greg

[Snoopy]

Ah, reading entrails is part 2 of my report...

In case this reference is a little obscure for some readers, 'reading the entrails' was a euphemisim for judging the investment suitability of RBD by share price charts. I have certainly taken a 'scriptual beating' for ignoring the charts myself on this thread. However, I found that if you are prepared to ride across business cycles -which by definition chartists don't do- it doesn't matter what direction the share price is going provided you are buying at a cheap price, based on average trading condition business fundamentals. I also acknowledge that I have been lucky that the Van Arkel/Creedy leadership has reinvented RBD so magnificently. My 'time in the market' (13 years for RBD) eventually made me luckier. Looking forward to your part 2 Greg. Make sure you are wearing teflon armour when you publish though!

SNOOPY

[h2so4]

My 'time in the market' (13 years for RBD) eventually made me luckier. Looking forward to your part 2 Greg. Make sure you are wearing teflon armour when you publish though!

SNOOPY

A little older and a little wiser aye snoopy

[Snoopy]

I found that if you are prepared to ride across business cycles -which by definition chartists don't do- it doesn't matter what direction the share price is going provided you are buying at a cheap price, based on average trading condition business fundamentals.

The chart below summarizes my last five years involvement with Restaurant Brands.

Attachment 3086

As a buy and hold over the five year study period RBD has been pretty attractive. But to add to my initial holding I was buying all the way along as the share price slid down. Those purchases turned out to be very astute at what in today's terms are rock bottom prices. By more or less doubling the amount of money that I had thrown at Restaurant Brands over this five year study period, my incremental investment was acquired at far less than the buy and hold price. The fact that on average I held those incremental shares for just 27 months, verses 5 years for my original holding also greatly enhanced the capital efficiency of this investment. The result was a stunning investment performance. However some might add it needed to be, given the less than satisfactory returns of other shares in my income portfolio.

SNOOPY

[Snoopy]

Hey guys, just written a quick blog post re: RBD, check out gregnz.wordpress.com.. Its the first part of my evaluation,

Hey Greg, how's part two of that valuation going? There has been some share price weakness of late with RBD dropping from $2.70ish to $2.60ish. However a SSH notice today reveals that the wiley Brian Gaynor is at work boosting Milford Asset Managemnets holding to above 7% now.

SNOOPY

[gregrday]

Sorry Snoopy, been super busy. Will try and sort it this weekend. Have been watching the share price slide too, my basic feeling is it could be a bit undervalued. I sold out at 2.35, so might be looking to get back in.

cheers
Greg

[Snoopy]

Have been watching the share price slide too, my basic feeling is it could be a bit undervalued.

Always good to get different peoples views on these things. Just to prove people have different ways of looking at things, check out what valuecruncher think.

http://www.valuecruncher.com/companies/7380

At the time of writing they see a fair value price for RBD as $5! Further looking at their site suggests that they are using valuation norms implied by Starbucks, McDonalds and YUM Brands. There is a rig difference between these three and RBD. RBD doesn't own any of the intellectual property associated with any restaurant chains, and is in fact a licenscee of YUM (KFC and PIzza Hut) and Starbucks (their Starbucks cafes). That means RBD does not have the same global growth potential of the others. To my mind valuecruncher are not comparing like with like, and as a result the company multiples they use for their valuation in this instance is flawed.

It is nice to dream though. If valuecruncher staff want buy my RBD shares at $5 each, then I will happily sell.

SNOOPY