Selling The Seas Case Study Part 1 – Making A Mistake?
I read the book Selling The Sea in early 2014 as a way to learn about the cruise industry. Up to that point I didn’t know anything about it other than I never want to go on one because of my dizziness.
From an investment perspective I wanted to expand my circle of competence to the cruise industry because it’s an industry that seems ripe for competitive advantages.
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Captured customers who have to stay on the boats for sometimes months at a time. Very few major operators. And high initial costs to buy or build boats that keep smaller companies out of the industry are a few examples.
While I learned about the industry I still haven’t invested in any cruise related public company because of high valuations. But I did learn about one in this book that caught my eye. And I’ve kept it on my watch list ever since.
I was never able to buy the company because it was overvalued. But was it really?
The company we’re going to do a case study on over the coming weeks is Steiner Leisure (STNR).
Private equity firm Catterton is about to buy STNR for $834 million. Or $65 a share. A 15% premium to its current share price. And a 39% premium to the price I could have bought it at almost two years ago.
So did I make a mistake in my analysis then by not buying it? Or is the private equity firm buying the company at overvalued levels now and making a mistake?
Let’s find out
Below are the 2013 and 2014 10K’s for the company and the most recent 2nd quarter 2015 release. I used the 2013 one to evaluate the company more than a year ago. And haven’t looked at them again since.
We need to use this one to find out if I made a mistake in my initial analysis.
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We need to use the 2014 10K below to find out if the company is a good buy today. Or if the private equity firm who’s buying it is making a mistake.
Also provided here is the most recent quarterly information the companies released as well.
The next case study post I’ll start to go over my preliminary analysis from both years.
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