Sad To Be Losing Ownership of This Company That Gained 129%; Brazil Fast Food Buyout

Sad To Be Losing Ownership of This Company That Gained 129%; Brazil Fast Food Buyout

Two years ago on this blog I got a tip that I should look at a Brazilian fast food company for a potential investment. A buddy said I should take a look at them because of previous articles I wrote about Jack in the Box and Wendy’s.

He thought I might find this Brazilian company interesting. And a stark contrast to the two other fast food companies I had evaluated at that time. And didn’t think high of.

He was right…

This Brazilian company was growing fast. Had high and growing profits because most of its restaurants were run by franchisees. And because it was lowering its costs. It had signed exclusive agreements with Coca Cola among others. And had a moat. The first – and still only – time I’ve come across a small restaurant/fast food company with a moat.

But best of all it was undervalued by a wide margin.

I found it to be worth conservatively between $16.50 and $22 a share. And when I bought it for the portfolios I manage it was only trading at $8 a share.

From a high of $18.99 to a low near $12 per share. The last two years have been a volatile ride up and down for this company.

The company has continued to grow and improve. And there was an awful low ball taken private offer of $15.50 a share by company insiders that I and other investors in it banded together. And successfully fought against.

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Brazil Fast Foods (BOBS) has received another buy-out offer. This time at $18.30 per share by Quiejo Holdings. And even though this is still low. This time the transaction will happen. BOBS management learned from last time…

BOBS management and Quiejo Holdings have already secured 40% of the non-inside owners of its shares to agree to the deal. Making it a certainty that a majority of “outside” shareholders will approve this transaction.

While I am glad we fought the first time and will be getting an extra $2.80 for each of our shares. And for the 129% gain in 2.5 years for the portfolios I manage. I will be sad to lose ownership of this company.

Not only because this company will continue to do great in the future. But because this time of my value investing education was a turning point for me. The lessons I learned from evaluating this company are a big reason I am where I am today.

BOBS was one of my first true “investments.” And I look forward to finding many more companies like this for those who subscribe to the newsletter I write.

Thanks to Red from the Red Corner Blog for sending wonderful idea to me. And for the lessons I got from evaluating and owning this company.