Chanticleer Holdings

[Packer16]

I have been looking for the historical investing record of Chanticleer or any of its principals but have not been able to find it.  Does anyone have what their historical record has been?  The data I have been able to find seems to show that they follow a value investment philosophy but I wanted to get an idea of their performance before I made a decision to invest especially since it appears that some of the investments in Chanticleer haven't worked out to well (a mortgage broker written down).  TIA

 

Packer

[Zorrofan]

Sanj, didn't you hold any investment in this company? Do you still or are you at least able to comment?

 

thanks

Zorro

[Parsad]

We hold all our shares.  That's about all I can comment on from that aspect.  If you would like more information on Chanticleer, it's probably best you contact them directly at [email protected].

 

Mike Pruitt, Matt Miller and Joe Koster will be able to give you some more information.  Basically, you have Chanticleer Holdings, which is the publically-traded holding company and the one that is trying to consummate the Hooter's transactions.  And then you have subsidiary Chanticleer Advisors, which is the investment advisory business and they run an investment partnership for accredited investors.

 

So you can get public information on Chanticleer Holdings, while you might be able to access their quarterly letters for their investment fund at Chanticleer Advisors by contacting them.  Between the two, you would be able to get a better idea of their investment philosophy.  Cheers!

 

[Junto]

Parsad, that looks like a rough investment...their 1st quarter 10-Q they were not sure they would have enough cash to make it through...

 

"NOTE 6:

 

GOING CONCERN

 

At March 31, 2009 and December 31, 2008, the Company had current assets of $34,626 and $23,556; current liabilities of $1,052,626 and $686,125; and negative working capital of $1,018,000 and $662,569, respectively.  The Company incurred a loss of $93,953 during the three month period ended March 31, 2009.  The Company receives quarterly cash inflow of $25,000 from management fees and $11,500 from investment distributions, but expects quarterly cash requirements of approximately $130,000 per quarter commencing in the second quarter of 2009, assuming the acquisitions discussed above are not completed."

 

No moat in this one.

[bargainman]

Take a look at this thread where Sanjeev briefly discussed Chanticleer:

 

http://cornerofberkshireandfairfax.ca/forum/index.php?topic=822.0

 

 

[Hawk4value]

Does anyone have new information regarding Chanticleer Holdings. Lately the stock price has been sinking like a stone. Can't seem to find any new info out that would cause the latest swoon.

 

Thanks.

[farnamstreet]

you can find Chanticleer Investors (a division of Chanticleer) letters to investors here

 

http://myinvestingnotebook.blogspot.com/2009/08/chanticleer-investors-ii-2009-q2-letter.html and

http://myinvestingnotebook.blogspot.com/2009/08/chanticleer-investors-ii-2009-q1-letter.html

 

 

[Hawk4value]

Thanks farnamstreet, very helpful. 

[JAllen]

Does anyone know background info on their mortgage company investment that was made in 2006?

[Hawk4value]

CCLR exploded to the upside today. The only piece of news is "Remodel Auction Retains Chanticleer Holdings, Inc. as Business Advisor". Part of the retention is a 3% interest in the company.  Does anyone have any further info on why this arrangement might cause such a change in market value.

[Parsad]

Looks like some numbnutz bought 100 shares near the ask price and pushed it up.  I can understand if someone bought several thousand or even several hundred, but 100 shares looks pretty damn obvious that someone is just propping up their quarterly numbers.  Cheers!

[FFHWatcher]

Are you kidding?

100 shares traded today.  Maybe you overlooked the volume? 

[Hawk4value]

For all you diehard CCLR investors pls note the following section from recent 10K:

 

File an S-1 Registration during the second quarter of 2012, and, assuming it becomes effective, plans to raise up to $15,000,000 from the sale of common stock and warrant units

 

I emailed Mike Pruit to express my concern about dilution to existing longtime shareholders. He said:

 

"Existing shareholders have option to participate, if they don't their percentage of ownership would be reduced. At the price the deal is being done a strong case can be made it is not dilutive..... The use of proceeds will be to open additional hooters locations in south africa, brazil and australia. We will buy an existing location in europe and open new locations in hungary and poland....the returns on equity we've seen to date warrant the raise and this capital allocation."

 

I think I agree with this assessment but would have liked a rights offering to existing shareholders instead.

 

Sanjeev do you have any thoughts???

 

 

 

 

[Parsad]

For all you diehard CCLR investors pls note the following section from recent 10K:

 

File an S-1 Registration during the second quarter of 2012, and, assuming it becomes effective, plans to raise up to $15,000,000 from the sale of common stock and warrant units

 

I emailed Mike Pruit to express my concern about dilution to existing longtime shareholders. He said:

 

"Existing shareholders have option to participate, if they don't their percentage of ownership would be reduced. At the price the deal is being done a strong case can be made it is not dilutive..... The use of proceeds will be to open additional hooters locations in south africa, brazil and australia. We will buy an existing location in europe and open new locations in hungary and poland....the returns on equity we've seen to date warrant the raise and this capital allocation."

 

I think I agree with this assessment but would have liked a rights offering to existing shareholders instead.

 

Sanjeev do you have any thoughts???

 

Long-term shareholders were given warrants to buy stock at a good price over the next five years, so that will temper the dilution a bit.  At the same time, ask yourself which piece of the pie do you want to own:

 

- the current Chanticleer that doesn't have the cash flows to sustain expenses.

- the Chanticleer that will acquire and build nearly 30 Hooters restaurants between now and 2016, where the cash flows will more than cover expenses and should provide a decent rate of return, if not a very good one with the expertise they have.

 

I would much rather own the latter, if the quality of what I own...even if diluted...is significantly better and will build long-term shareholder value.  Also remember, that they have the ability to raise $15M, but it doesn't necessarily mean they will raise the total amount.  Finally, the shares in the company are closely held, and so it is unlikely that the existing shareholder base would be able to fully subscribe to a $15M issue...it's a 6M company. 

 

They need to raise the money to build these restaurants out, and they are pretty much going to be the leader in Hooter's International expansion for the forseeable future.  The other side of this is they need to get of size to generate more exposure so they can raise money for Matt and Joe to manage.  It's just not happening at the moment, and these guys are smart and need to be managing more money!  I'm trying to get close to Mike so I can steal these guys one day!  ;D  Just kidding...not gonna happen...they are staying put!  Cheers!     

[bargainman]

- the current Chanticleer that doesn't have the cash flows to sustain expenses.

- the Chanticleer that will acquire and build nearly 30 Hooters restaurants between now and 2016, where the cash flows will more than cover expenses and should provide a decent rate of return, if not a very good one with the expertise they have.

 

Dumb question..  if the current Chanticleer doesn't have the cash flows to sustain expenses, why would the future one have them?  presumably the current management will be running the future Chanticleer..  What sorts of mistakes did they make that lead to their not being able to cover expenses?

[Parsad]

- the current Chanticleer that doesn't have the cash flows to sustain expenses.

- the Chanticleer that will acquire and build nearly 30 Hooters restaurants between now and 2016, where the cash flows will more than cover expenses and should provide a decent rate of return, if not a very good one with the expertise they have.

 

Dumb question..  if the current Chanticleer doesn't have the cash flows to sustain expenses, why would the future one have them?  presumably the current management will be running the future Chanticleer..  What sorts of mistakes did they make that lead to their not being able to cover expenses?

 

Certain expenses are fixed or recurring...salaries, office space, legal, accounting, etc.  Those costs will not increase significantly, even though net cash flows from more and more restaurants will. 

 

There was no real mistake.  They had closed the deal on Texas Wings and Hooters Inc (not Hooters of America), along with financing, back in late 2007/early 2008.  But when the credit crisis hit, the financing fell apart.  Once that happened, they had already incurred hundreds of thousands in legal and acquisition exploration costs, leased new office space, and hired a couple more staff internally.  Because the deal could not be consummated, they had to sell off chunks of other assets just to pay bills. 

 

The only ace up Mike's sleeve was the right of first refusal he had on Hooters of America if it ever was sold.  When HOA was finally sold, he exercised his right and that's where we are today.  He's on the board, they have a very small investment in HOA, but he's been granted the right to expand the business internationally.  Cheers!

[Hawk4value]

Sanjeev,

 

I appreciate the warrants that were granted. I also understand the proposed $15 mil raise would not be possible solely thru the existing shareholder base. But couldn't some consideration be given to longtime holders??  How about a rights offering that covers a portion of the $15mil. Anything??? 

[Parsad]

Sanjeev,

 

I appreciate the warrants that were granted. I also understand the proposed $15 mil raise would not be possible solely thru the existing shareholder base. But couldn't some consideration be given to longtime holders??  How about a rights offering that covers a portion of the $15mil. Anything???

 

I agree with you Hawk!  Long-term shareholders have been very patient with Chanticleer, so a portion of the allotment could have been set aside for existing shareholders to purchase.  This is something that shareholders could still address with Mike.  Send him your comments...he's a very receptive CEO and if enough shareholders feel it is important, something could always be done.  But if he doesn't know how shareholder's feel, he's going to move forward with maximizing shareholder value for all shareholders...whichever way that can happen.  Cheers!