BLPA’s Rearview Mirror: Blame it on Abby

BLPA’s Rearview Mirror

Blame it on Abby

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Abby
Abby

We’re a bit late with the Rearview Mirror due to the adoption of a new pug.  Last Saturday, just as we were about to sit down to tally up the week, we received an email from Green Mountain Pug Rescue saying that Abby was mine.  I was third or fourth in line, and somehow the prior applicants failed the Foster Mom Test.  It’s always an advantage, when you have two pugs to act as references.

I’ve determined that a female pug is essential to the herd.  She adds the “je ne sais pas quoi” to the household.  The boyz are settling in to the new Boss.

So, I returned home to a less-than-enthusiastic husband, with regard to a third pug.  Of course, Don now claims that Abby is the Smartest-of-the-Bunch.  And she is.  Almost no training required.  Though, after a settling-in period, we will enroll her in a Good Canine Citizen course.  Every pug needs a ribbon.

We have tons of information for this week’s report, so we are parsing it out in a  few parts.  The first section is Earnings and IPO’s.

Earnings and the Market[1]

[Click on the company name of the story and on the stock symbol for the stock chart]

What’s a 317 point drop among friends?  Thursday the DOW dropped 317 points, and the hand-wringing has begun anew.  Right on the heels of my call to my financial advisor saying that we needed to start thinking about value protection, and review additional portfolio strategies.  I just hate it when I’m right.  Of course, this is short term.  Longer term, we have yet to see.  So, I’m not fleeing into cash—that’s an equally dangerous position.  We just want enough cash available short term to weather some of these market hiccups.

Isn’t it interesting how we’ve come to expect this market volatility.  And with interest rates this low, bonds aren’t much of a safety.

The economy grew by 2.9 percent in the second quarter, which helps make up for the 2.9 percent contraction in the first quarter.  Year-to-date?  We’re dead in the water.

LinkedIn (LNKD:  Nasdaq) reported sales and profits that topped estimates.  Revenue grew 37 percent to $534m.  Non-GAAP profits were $63m or $0.51 as opposed to $0.38 in the prior year.

Tesla Motors (TSLA:  Nasdaq) had non-GAAP revenue of $858m, up 55 percent,  and non-GAAP Net Income of $165m or $0.11 per share.  The stock fell slightly, in part because investors are skeptical that Tesla can reach it’s 2014 car-selling goal.

Yelp (YELP:  Nasdaq) had it’s first profit since it’s March 2012 IPO.  Revenues grew 61 percent YoY to 88.8m.  Net income was $2.7m or $0.04 per share, up from a loss of $(0.01).  The stock promptly dropped due to the lower than expected business accounts growth.

Yum! Brands (YUM:  NYSE) filed an 8-K on Thursday that a Chinese food supplier had been using illegal food handling practices, and impacted sales.  China and safe food—doesn’t go in the same sentence according to my nephew who lives in Shanghai.

IPOs[2]

(20 IPO’s)

If highlighted, click on the Company name, and you will find the earnings announcement.  Click on the stock symbol for the stock movement.

Lot’s of IPO’s, but 18 of the 20 over the past two weeks were either medical-related or buyouts/recaps.

El Pollo Loco Holdings, Inc.(LOCO:  Nasdaq) sold 7.1m shares at $15 per share, raising $106.5m at a valuation of $538m.  The stock closed the week at $41.20 per share.

El Pollo Loco, Spanish for “The Crazy Chicken”and pronounced “L-Po-yo Lo-co,”is the nation’s leading restaurant specializing in flame-grilled chicken. We strive to be the consumer’s top choice for flavor by serving high-quality meals, featuring our authentic, marinated, flame-grilled chicken. Our distinct menu, inspired by the kitchens of Mexico, along with our service format and price points, serves to differentiate our unique brand. We are strategically positioned to straddle the quick service restaurant, or QSR, and fast casual segments of the restaurant industry. We offer high-quality, freshly-prepared food commonly found in fast casual restaurants while at the same time providing the value and convenience typically available at traditional QSR chains. This positioning allows us to appeal to a broad range of consumers and to achieve a balanced mix between lunch and dinner sales. As a result, our company-operated restaurants generated an average unit volume, or AUV, of $1.6 million and an average check of $8.90 in fiscal 2005. When compared with QSR chains, our system-wide AUV ranked fourth nationwide in 2005 according to Nation’s Restaurant News, an industry publication, and we believe that our average check is higher than that of the typical QSR chain. We have also achieved strong same-store sales growth, with our restaurants system-wide demonstrating annual average same-store sales growth of 5.4% since 2000 and system-wide same-store sales growth of 8.2% for fiscal 2005.

Mobileye N.V.(MBLY:  Nasdaq), located in Jerusalem, Israel,  sold 35.6m shares at $25 per share, raising $890m at a valuation of $5.3b.  The stock closed the week at $37 per share.

Mobileye is the global leader in the design and development of software and related technologies for camera-based Advanced Driver Assistance Systems (“ADAS”). Our technology keeps passengers safer on the roads, reduces the risks of traffic accidents, saves lives and has the potential to revolutionize the driving experience by enabling autonomous driving. Our proprietary software algorithms and EyeQ​®chips perform detailed interpretations of the visual field in order to anticipate possible collisions with other vehicles, pedestrians, cyclists, animals, debris and other obstacles. Our products are also able to detect roadway markings such as lanes, road boundaries, barriers and similar items, as well as to identify and read traffic signs and traffic lights. Our products combine high performance, low energy consumption and low cost, with automotive-grade standards. Our technology was first included in serial models in 2007. We estimate that our products were installed in approximately 3.3 million vehicles worldwide through March 31, 2014. By the end of 2014, our technology will be available in 160 car models from 18 original equipment manufacturers (“OEMs”) worldwide. Further, our products have been selected for implementation in serial production of 237 car models from 20 OEMs by 2016. Mobileye’s more than 15 years of research and development and data collected from millions of miles of driving experience give us a significant technological lead. For the past six years, we have won more than 80% of the serial productions for which we have been requested to provide a quotation.

Medical Related

Note:  We don’t have much data for these offerings—ran out of time.

Avalanche Biotechnologies (AAVL:  Nasdaq) sold 6m shares at $17 per share, raising $102m.

Bio Blast Pharma (ORPN:  Nasdaq) sold 3.2m shares at $11 per share raising 35.2m.

Catalent (CTLT:  Nasdaq) sold 42.5m shares at $20.50 per share raising $871.25m.

Innocoll (INNL:  Nasdaq) sold 6.5m shares at $9 per share raising $58.5m.

HealthEquity (HQY:  NYSE) sold 9.1m shares at $14 per share, raising $127.4m.

Immune Design (IMDZ:  Nasdaq) sold 5m shares at a price of $12 per share raising $60m.

Intersect ENT (XENT:  Nasdaq) sold 5m shares at $11 per share, raising $55m.

Loxo Oncology (LOXO:  Nasdaq) sold 5.3m shares at $13 per share raising $68.9m.

Macrocure (MCUR:  Nasdaq) sold 5.4m shares at $10 per share, raising $54m.

Marinus Pharmaceuticals (MRNS:  Nasdaq) sold 5.6m shares at $8 per share, raising $44.8m.

Medical Transcription (MTBC:  Nasdaq) sold 4.1m shares at 5 per share raising $20.5m.

Ocular Therapeutix (OCUL:  Nasdaq) sold 5m shares at $13 per share raising $65m.

Pfenex (PFNX:  Nasdaq) sold 8.3m shares at a price of $6 per share raising $49.8m.

Vascular Biogenics (VBLX:  Nasdaq) sold 5.4m shares at $12 per share raising $64.8m.

Spinouts, Buyouts and Roll-ups

Central Ohio-based Advanced Drainage Systems (WMS:  NYSE) sold 14.5m shares at $16 per share raising $232m.  The Company makes those big plastic tubes used for drainage and other applications.

Orioin Engineered Carbons (OEC:  NYSE) sold 19.5m shares at $18 per share raising $351m.

GE Spin-out, Synchrony Financial (SYF:  NYSE), sold 125m shares at $23 per share, raising $2.87b.  The reception was tepid, as the stock closed the week at $23 per share.  When a stock trades flat, it means the underwriters heroically managed to close the stock flat for the week.  If I believed the signs, I’d say the stock is a short.  Time will tell.  Place bets at your own risk—we don’t provide recommendations, just our observations based on decades of experience on the street.  Sometimes we’re right—sometimes we’re wrong.

Townsquare Media(TSQ:  NYSE) sold 8.3m shares at $11 per share raising $91.3m.

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All the best,

Margaret Johns

Founder & Chairman

Affiliates:

SiVal_LogoJan Robertson

SiVal Advisors, LLC

 

 

 

 

 

Bic Stevens

Stevens Capital Advisors

 

Chartworth2Chartworth

Susan Woods and Vlad Harris

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Margaret Johns is the Founder and Chairman of BlueLake Partners, a boutique M&A investment bank based in the Greater Boston Area.  Prior to founding BlueLake she was an employee founder and Managing Director at Needham & Company where she worked in Corporate Finance in New York City and headed up its Boston office.  She now lives in Londonderry, New Hampshire with her husband, 16 year old step-daughter and three pugs.  When she’s not working with clients, FINRA or writing blogs she competes on the Granite State Penguins Masters Swim Team, skis, rides her bike or is out walking her pugs.

Content researched, edited and reviewed on a best efforts basis.

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We make no claim to being comprehensive in our review, as the contents are companies and topics we, ourselves, find of interest.

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This newsletter is currently being proofed by Dave Henshaw, which is much appreciated. Dave is my USMS swimming lane mate, and Granite State Penguin team-mate. He is retired from MIT, where he used to produce and proof their annual financial report. Exactly what we need.

[1] WSJ Morning Moneybeat July 21 – August 1, 2014

[2] Source: Renaissance Capital, SEC documents, Yahoo Finance. Nasdaq website