30thMarch
True Religion Buyout?
True Religion (TRLG) shares closed the day at $16.24, up $1.28 on the day, representing a gain of nearly 9% on about 5 times average volume. Shares remain active after hours, up almost another 4%. While no official news has been released, the rumor behind this move calls for a management led buyout of the company, as reported by CNBC’s Mark Haines early this morning.
Though completely unconfirmed at this point, this is a rumor that looks to be a realistic possibility. Goldman Sachs was hired about 9 months ago by True Religion and has remained on board despite no news or updates regarding what exactly they are being compensated for. Normally, when an investment banker such as Goldman Sachs is brought on board to explore strategic alternatives, the company winds up being acquired or taking on an initiative such as a large buyback or dividend to boost shareholder value. Also helping to make this rumor appear viable, is the fact that management already owns about 46% of the shares outstanding, a very significant amount. Couple these facts with a very strong balance sheet and strong financial metrics that make this stock look very undervalued at current levels, and the possibility of a management led buyout of True Religion doesn’t appear to be too far fetched.
Disclosure: Joseph Urgo has a long position in True Religion Apparel.
Diane Olson says 31st March @ 12:50
I have been observing TRLG since it was traded on the OTC, and it has certainly grown as a company in that period of time. Management has made some internal changes for the better, so they have a strong team at this point. With a fast-paced growth in number of outlets, this seems headed for a very nice brand operation reaching across the country. Recently they entered the Midwest, which I feel will do very well. No doubt they have not made many mis-steps in their progress. I also feel that there is a strong possibility that there will be a management buyout since they already own almost 50 percent of the shares. I also have a strong sense that this will come to fruition in the very near future.