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November 20, 2008
Re-allocation hurts this analyst
November 20, 2008
Today isn't a good one for Amy G. Vinson, one of the industry's keenest observers.
She has covered restaurants for seven years as a senior research analyst for Avondale Partners in Nashville. Her coverage came to an end this morning.
In her most recent note she said, "We are suspending our research coverage of BOBE, CBRL, CHUX, COSI, KONA, MRT and MSSR." She added that "this move" doesn't suggest her opinion of these stocks had changed since rating them all "Market Perform."
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| Amy G. Vinson |
Vinson sounded glum but realistic on the phone. There was little she could do or say, she explained, to drum up investor interest in the restaurant space.
"Part of problem is that there is no valuation metric that holds water any more. P/E means nothing because no one believes in the P," she offered.
Ditto for tumbling market caps. "There’s virtually no audience for $40 million to $50 million market-cap companies. There was little business to do and the firm decided on a re-allocation of resources," she said, adding that suspension meant Avondale may again one day follow these names.
Vinson knows she isn't the only analyst taken off her beat. " " Management teams have told me other analysts have been forced to re-allocate resources," she said.
A lack of capital has hurt the group. Banks, for example, want no part of it given so much restaurant debt already on their books. "Think about all the debt Wachovia is carrying," she said.
Vinson likes restaurants, and she want to keep writing about them, which she has done well since 2001. For now, however, she'll be following personal-care product companies.
"This is not a day I've found any levity in," she declared.
Vinson knows she isn't the only analyst taken off her beat. " " Management teams have told me other analysts have been forced to re-allocate resources," she said.
A lack of capital has hurt the group. Banks, for example, want no part of it given so much restaurant debt already on their books. "Think about all the debt Wachovia is carrying," she said.
Vinson likes restaurants, and she want to keep writing about them, which she has done well since 2001. For now, however, she'll be following personal-care product companies.
"This is not a day I've found any levity in," she declared.
Posted by David Farkas on November 20, 2008 | Comments (0)
Industries: Expansion
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