Chicken Liquidation CAGLE’S INC -CL A(CAGAQ) /Good Reading

This company has just received a bid post-petition (bankruptcy) and the equity shareholders look to receive $3.70 to over $4.00.  The risk is in how many weeks until you receive money for your shares in cash. This is only appropriate for small investors since liquidity is limited. You might be able to make some coin on a small investment but please do your own work.  Remember the chickens could fly away.

Practice reading court documents

Click through the links in this paper: Chicken Bankruptcy. Note how the price moved up before the announcement because of investors considering the odds of a higher bid being offered.

To learn you should read the court document (second link) in the paper and read the balance sheet, then see if you agree with the analysis.   Note the importance of incentives (who owns the majority of the equity). Always be sure that you are in alignment with the owners or people with a stake in the outcome of the auction.   The auction price has already been announced so the risk is in time to completion.

For making you read about chickens I will be awarding this prize:

Value Insight and you should read:TAVF_2Q_2012 Letter

Bernanke Under Duress

Sources have confirmed that President Obama’s Secret Service Specialists are torturing Bernanke until he agrees to crank up QE_More. Gruesome scene:http://www.youtube.com/watch?v=CSe38dzJYkY

If Hitler ran for office in England

http://www.youtube.com/watch?v=YzRbC7lQ-EQ&feature=related

6 responses to “Chicken Liquidation CAGLE’S INC -CL A(CAGAQ) /Good Reading

  1. Hey John,

    I just posted a quick update to the article you linked to with the most updated financial results – http://www.whopperinvestments.com/cagles-reports-results-through-may-5-4-50-recovery-likely

  2. How do you get to your $3.70-$4.00/share number. I get significantly lower.

  3. Finally got a chance to read through the excellent notes. The court has given approval on moving on the bid, but I’m unclear as to when the deal can be consummated (at least the $69.5M) and my understanding is that the 8% note will be paid out over 4Qs from closing while interest and cash from the biz accrues.

    Now for the official rookie questions: Wouldn’t one expect to see the share price move up quickly because of the news (link below) What does the market see given that the stock price is going down given this news? This article indicates the note is guaranteed between the CEO and Koch Foods: http://www.bloomberg.com/news/2012-05-15/cagle-s-wins-court-approval-to-sell-assets-to-koch-affiliate.html

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