The Potential New Brazil Fast Food Company Buyout

The Potential New Brazil Fast Food Company Buyout

A year and a half ago many bloggers. Hedge funds. Private investors. And I banded together to campaign against a horrible proposed buyout offer by Brazil Fast Food Companies (BOBS) controlling shareholders.

At the time I thought BOBS was worth a conservative $20 – $25 per share.  So the offer by company insiders of $15.50 was ridiculous.

We made enough noise. And got enough shares together that we were able to vote down the ridiculous low ball offer of $15.50 per share.

Well now there is another offer on the table. And several people have asked my thoughts on this new offer.

Queijo Holdings Offer To Buy Out Brazil Fast Food

In January I wrote my thoughts in this post – Sad To Be Losing Ownership of This Company That Gained 129% – about the offer.

I explained in that post that I expected the buyout offer to get approved. And to lose ownership of BOBS. But I didn’t explain why I thought this.

The Queijo Holdings offer of $18.30 per share for BOBS shares not owned by the controlling shareholders is still a low ball offer. In my opinion it is a certainty to get approved.

One reason is because BOBS insiders learned their lesson from the previous failed buyout offer.

A year and a half ago BOBS insiders didn’t presecure any non controlling shareholders votes on the proposed deal.  This time they have.

The way I understand it… This vote requires a simple majority of non controlling shareholders to vote yes to approve the deal. And this time BOBS controlling shareholders have already gotten 40% of the non control voters to approve this deal.

In addition, two independent stockholder groups of the Company that approached the Controlling Stockholders, which collectively represent 40.55% of the shares of common stock held by minority stockholders, have agreed with the Controlling Stockholders to support a transaction only if the Board of Directors recommends one at the price set forth in the proposal.

This means that only 9.46% more non controlling shareholders need to vote yes to approve this deal.  While I don’t know the results of the last vote.  I will bet BOBS got more than 9.5% of non controlling shareholders to vote yes for the transaction to approve it.

The above quoted area is from this site.

The above article also explains the other reasons why I am positive this transaction will get approved.

The article explains that a “special committee” must approve this deal before it can go through. But BOBS and Queijo Holdings are picking the “special committee.” So the special committees incentives are to approve the price. And approve the deal since BOBS and Queijo are paying their fees in this case.

And whoever pays the fees for something usually gets what they want.

The above reasons are why I am positive this deal will go through.

I hope I’m wrong because I don’t want to lose ownership of this company…

But these are the reasons I expect this deal to go ahead.


To gain access to a free 20-page gift that will help you evaluate companies faster.  Is something I use every time I research a company.  And to make sure you get all future posted content. Go to this link.

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.

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.

Portfolio Update and Weekend Reading Links

Portfolio Update – Sold Vivendi.  Now Portfolios Are 69% Cash.

I made a transaction for the first time in more than a year in the portfolios that I manage and wanted to update where those stand as of today.  I sold out of Vivendi today up 50% in the nearly 2 years that I held the company.  My reasons for selling were simple: 1) Vivendi was one of the first companies I bought into after I started doing actual company analysis and the thesis played out exactly as I had hoped it would.  They sold assets, paid down debt, and are in a much healthier position now going forward.  2) Going forward there is now too much uncertainty for me on what their plans are with their massive amount of cash they will soon be getting and I do not want to see a repeat of the early 2000’s acquisition spree that went horribly wrong.  3)  MOST IMPORTANT POINT.  I am now much more confident in my abilities to analyze companies for potential investment then I was two plus years ago when I bought Vivendi and think that I can do much better buying microcaps and/or special situations companies and want to be ready for any kind of market crash with a lot of cash in the portfolios.

The percentages below are the percentages (rounded) that make up the current portfolios.  Also, until the market drops significantly the make up of the portfolio below will likely remain intact until more companies become undervalued again and I can start buying again.

Cash – 69%

BOBS – 13%

PARF – 12%

CMT – 6%

Weekend Reading Links

The New York Times – Cocaine Incorporated.

A Wealth of Common Sense – Buffett’s Fourth Law of Motion; Your Behavior.

The Daily Galaxy – An absolutely amazing site if you love science, astronomy, exoplanets, and anything else having to do with space.

Financial Times – Rafael Nadal’s Key To Winning.

The Sova Group – Xoom Company Analysis.

East Asia Student – 10 Best Mandarin Learning Resources.

Walrus Value – Investment Booklist and Borrowing Hard To Find Books for Free.

Valuewalk – The Classic Shelby Davis Double Play.

JLCollinsnh – The Worst Possible Investment you Can Construct (Practicing Inversion).

MIT Technology Review – Scientific Thinking In Business.


2013 Portfolio Review: Cumulative Two Year Gain of 98.13%!

“Investing is where you find a few great companies and then sit on your ass.” Charlie Munger

Last year I did an entire write-up on my 2012 portfolio review going over how well or poorly all the companies I wrote articles on did after I wrote those articles.  I wrote 15 total articles last year and the companies I bought led the portfolios I manage to a gain of 26.20% last year. I thought it was a pretty good first year after truly dedicating myself to value investing but I knew I could do better after eliminating some of the many mistakes I made in that year and purging the few remaining companies I still owned in those portfolios from when I bought into them when I didn’t know what I was doing.

With the help of the rising market, eliminating some of my mistakes, doing a lot of other stuff instead of investing, and getting some tips from other value investors on companies to buy, the portfolios that I manage have gained 71.93% this year as of today.

% Gain YTD
Core Molding Technologies (CMT) 88.67%
Vivendi (VIVHY) 12.39%
Paradise Inc (PARF) 42.86%
Calloway Nursery (CLWY) 100%
Brazil Fast Food Company (BOBS) 112.63%
Strattec Security (STRT) 75%
Average Gain 71.93%


Core Molding Technologies – I bought into this company too early last year when I gave into my impatience after months of not being able to find a company to buy into.  At the end of last year I as sitting on an 8% point loss on my investment.  With the rising market and good continued developments at the company this year it gained 88.67%  I still own CMT.

Vivendi – At year’s end last year I was sitting on a 27% gain.  This year with all the spin offs/sales at the company YTD it has gained another 12.39%.  I still plan to hold onto this company while it continues its transition to a purely media driven company.

Paradise Inc – I bought this company in March (one of only two companies I bought this year) and in that time it has had almost no news either positive or negative so I guess this companies gains of 42.86% are chalked up to the overall rise in the market.  I still own Paradise Inc.

Calloway Nursery – The other company I bought in the calendar year of 2013.  Originally I saw other value investors like OTC Adventures writing about the company and paid no mind to it.  Luckily after talking with Jeff from the Ragnar is a Pirate blog, DTEJD1997,  them sharing some information about how much the companies properties were worth, and doing my own research into the company, I decided to buy into them and I am glad that I finally paid attention to these other investors.  I have sold out of most of my position in this company at an exact double of 100%.  So far it has taken me four months to sell out of that position and it will likely take another two to sell out of the rest of it.  I still like this company and if the price goes back down substantially, all else remaining the same, I may buy back into it again.

Brazil Fast Food Company – I bought into this company last December after Red from the Red Corner Blog recommend that I take a look into them.  Again, I am thankful that Red mentioned them to me.  After a year where the company was gaining a lot after continued good results, the companies owners wanted to take it private at a ridiculous offer, which was then voted down, and the company has continued to rise after that.  The company YTD has gained 112.63%, I still own them, and plan to hold them for the long-term.

Strattec Security Corp – Another company I bought into last December.  This company had very good continued results, had some new positive developments, the stock went up very quickly and I sold out of the entire position up 75% in May.  Since then the company’s stock price has hovered around where I sold it.  Like Calloway, if STRT drops substantially, all else remaining the same, I will buy back into them because I think they are an excellent company.

Last years 26.20% gain + this years 71.93% gain means that the portfolios that I manage have cumulatively gained 98.13% (49.06% on an annual basisin two years since I started to take this seriously.  The portfolios I manage were in 40%-55% cash the entire year and are at the higher end of that range now.  Frankly I was shocked when I saw this years gain and the two-year cumulative gain since I only do an entire portfolio review once a year.

What Does The Above Mean To Me?

Not much honestly.  A two-year track record doesn’t mean much to me since I am a long-term investor.  I was also helped a lot by two recommended companies from other value investors and the overall rise in the market.  Am I glad and excited about this great start yes, but I still have a lot of work to do and at this point I think that I am only an average to above average stock picker as I have a lot of room to improve and was helped a lot by short term luck of the stock market rising a lot.

Some of the Lessons Learned This Year

  1. My extreme patience and discipline gained from dealing with my health issues helps greatly as a long-term, very strict value investor.  I did a lot of stuff not directly related to investing this year because I could only find two companies that I could buy into all year.
  2. You need to keep a record of what you do.  This was such a long year filled with great and not so great things for me that I have recently been telling everyone I only bought one company this year.  I completely forgot about the PARF and BABB articles I wrote at the beginning of this year and that I actually bought into PARF back in March along with CLWY.  Memories are not always what they seem to be.
  3. Sometimes it pays to “steal” investing ideas from others, but you still must do your own research into the company.
  4. Turn over as many rocks as possible.  While I only invested in two companies this year I have researched hundreds if not thousands of other companies and have built up a watch list of around 20 companies.  When those companies stock prices go down I will be ready to potentially buy some of them with the cash I have built up and the knowledge I have gained of those companies.
  5. Starting a business is very hard.  This is my biggest failure of the year by far and one that I hope to rectify at some point in the future.  The business my brother and I started was a complete failure from the point of gaining customers and revenue.  At this point we are not doing anything at all with the company as we overestimated the demand in our area for our product.  We learned a lot of lessons from this and we hope to start a successful business in the future.
  6. Writing a book is very hard.  Most of my year (the better part of 10 months) was spent writing, editing, researching, etc for the book.  It was well worth it as it has provided some for my family, for two needy families Christmas presents, I learned an enormous amount, and it has hopefully helped newer investors learn this craft faster.
  7. It obviously pays to buy into a few great companies and then sit on your ass and be patient.

Goals For This Year

  1. Continue to learn something every day.
  2. Improve in some way every day.
  3. Turn over more rocks.
  4. Read more.
  5. Write more.

I hope you all had a great year, thank you all so much for all the conversations, reading this blog, buying my book, and I look forward to talking with you all more and getting back to writing more articles for the blog in this coming new year.


How To Value Invest Epilogue Excerpt: How Far I Have Come In Less Than Two Years Time of True Dedication To The Craft of Value Investing


“Rule number one: never lose money. Rule number two: never forget rule number one.”  Warren Buffett

I hope you have been able to see the progress that can be made in a short period of time because you can make the same progress if you follow the lessons of this book.  When I started to dedicate myself to getting better I tried to learn and implement as many new things as possible into every article as you probably noticed in the huge chapter on Altria.  After doing this for a while and getting a bit overwhelmed I decided it would probably be better just concentrating on adding or learning one new thing for each article written   I found that this was a much better way for me to do things as I improved much faster than when trying to learn many new things at once.  Going by this process I also noticed that my analysis was still concentrated, I was improving more, and the actual analysis articles got much better because I understood what I was doing better than when trying to learn multiple things at once.

The exact process of becoming a better investor is tough and when you first start, you will probably be doing a lot of things and concentrating in areas that you later will have no interest in.  Treat every company you research as a potential learning experience, try new things, and continue to constantly push for improvement.  Your investing journey will change drastically over time and it is a good thing if it does because it means you are pushing yourself to keep learning and improving.

As an example of how far you can come using the principles and techniques outlined in this book I want to show you how much I was able to improve in just one year once I dedicated myself to becoming an excellent value investor.  The following is my first ever stock “analysis” write up.  The information is completely unedited other than change of the font, size of font, some of the formatting, and a few typos.

Vodafone Group PLC, ADR, (VOD) info

All information taken from, Vodafone’s website,, or Vodafone’s most recent annual financial report.


With 343 million proportional customers (total customers multiplied by its ownership interest), including its 45% stake in Verizon Wireless, Vodafone is the second-largest wireless phone company in the world behind China Mobile. It is also the largest carrier in terms of the number of countries served. Vodafone has majority or joint control in 22 countries and minority or partnership interests in more than 150 total countries. The firm’s objective is to be the communications leader across a connected world.  They have four major markets that they break their financials into: Europe, Africa Middle East and Asia Pacific or AMAP, India, and the United States through a partnership with Verizon.


  • Huge company operating in more than 150 countries making them more diversified and able to withstand drops in revenues and profits coming from a single region or country.
  • Generates huge free cash flows of at least $8.25 Billion in each of the last 8 financial years.  Free cash flow or FCF is basically the money that’s left over after expenses, dividends, payments, etc that the Vodafone can use as it pleases.  Generally VOD uses their FCF to increase their dividends, buyback their own stock, acquire other companies, or pay down debt.
  • Current dividend yield of 6.97%, the average company in the S&P 500 has a yield of around 2%.  Pays a semiannual dividend in June and November of each year.  Also receiving a special dividend from Verizon, $1 billion of which will go to paying down Vodafone debt, $3.5 Billion will go to pay a special dividend to Vodafone shareholders in January or February of 2012.
  • FCF/Sales ratio over 16% each year since the 2002 financial year.  Anything over 5% means they are generating huge amounts of cash.
  • Interest coverage ratio of 23.4, anything over 1.5 is good. Interest coverage ratio is how many times they can cover the payments of interest on their debt.
  • Payout ratio of around 50% for the dividend meaning the dividend should be safe for the foreseeable future.
  • Raising their dividend an average of 7% per year for the next 3 years.
  • Lower debt/equity than their industry competitors.
  • Growing a lot in Asia, Middle East, India, and parts of Africa.  Also still a lot of room to grow in those areas as they are relatively new to them, especially India.
  • Paying down debt with FCF.
  • Gross margin, net margin, and EBT margin all over 17% which is very good.
  • Still a lot of room to grow their revenue through people upgrading to smart phones and paying for data packages which they make more money off of then regular phones.
  • Executive pay is linked to how well the company does, and they encourage their executives and directors to own company stock.


1. Still a lot of debt even though they are paying it down, around $40 Billion

2.  Most of Western Europe except Germany is having huge economic problems which have led to lower sales and profits in those areas.

3.  The fear or actuality of another global recession would hurt their sales and profits.

4.  Problems at Verizon which VOD owns 45% of would hurt future payments from Verizon to VOD.

5.  Most of their revenue is generated in Europe where as above, there are big financial problems.

6.  Since they are in so many countries they have to deal with many regulations and sometimes even lawsuits from other governments or companies in those countries.

Final Thoughts:

Overall I feel very good about Vodafone’s prospects to be a great investment for the long-term.  We are buying them when they are valued at a very good price, especially compared to their competitors. They have huge growth potential in India, a country that has over 1.3 billion people, as they have only penetrated that market by around 10%.  They are paying down debt, upping their dividends and receiving a special dividend from Verizon.  Even if their share price doesn’t go up over the next few years, which I believe it will by quite a bit, then we are still covered by the near 7% dividend that they are going to keep growing at least 7% a year for the next 3 years.  Also, with their huge FCF they can maybe pay down debt faster, acquire other companies to keep growing, pay more dividends, or buyback their stock.

As always if there are any questions let me know.  I believe we will all do well with this stock in our portfolios over the long-term.

Jason Rivera

Go back and compare this to any of the chapters in the book and the difference is shocking.  Shocking in how inadequate my thinking still was at this point where I was investing real money as most of the above you can tell was taken directly from financial sites and the companies own website, not exactly in-depth independent analysis on my part.  The reason I put my first ever write-up in this book is to illustrate how much better you can get in a very short time frame by using the principles and techniques outlined in this book and dedicating yourself to constantly improving.

If you do love value investing, have followed what has been shown to you in this book, have read from some of the sources that I have talked about and listed on my blog, and have the drive to continually improve yourself and get better, I guarantee that you will now be better at evaluating whether a company is a potentially fantastic investment better than most MBA’s and professional level investors without having to spend tens or hundreds of thousands of dollars at a big time university and saving years of time having to research all of this information for yourself.

Thank you so much for buying this book, good luck, and continue to work constantly at getting better and improving your processes.

I shared my first ever “analysis write up” last year during my year-end performance review and wanted to share it again to illustrate how far you can come by truly dedicating yourself to the value investing craft and continually learning and improving in a short amount of time.  With the things I teach in the book I hope the process will become even faster for you if you choose to go down this road.

Next week I will release the 2013 year-end review for my personal portfolio and the portfolios I manage.  The results were shocking to me since I only do a full performance review usually once a year.

If you have enjoyed this and other portions of the book I have released thus far please visit this page to buy the book and to see the now four reviews, all of which are 5 stars, that the book has received thus far.

If you would like to read other excerpts from How To Value Invest that I have released please view this page.