I was pretty busy with my life and job recently and I unfortunately didn’t have time to update my blog. But, something very interesting happened in august.
On monday august 25th, there was a rumor that Burker King was interested in buying Tim Hortons. Tim Hortons shares went from 68.78$ CAN to 85.40$ CAN in a matter of two or three hours of trading.
Last may, I had bought 25 shares of Tim Hortons at 59.17$ (CAN) per share.
Usually, when such things (rumors) happen, shares skyrocket only to fall back to lower territories for a while until real agreements are disclosed. So, when I saw my shares skyrocket, I decided to take some profit and sold a little more than half of my position (15 shares) at 82.83$ CAN, a profit of 23.66$ CAN per share or 40%!!! Not bad!
I consider myself a dividend and value investor. But, when such opportunities arise, it is sometime a good move to sell! Was it a good idea or not? Time will tell.
One thing for sure is that I didn’t know at the time I sold my shares that the Oracle of Omaha was behind that deal… Dear Mr Warren Buffett!!
When you can get a profit of 40% in 3 months on one of your investments, you definitely should be very happy and I am no different. But, when one of my colleagues told me on Tuesday august 26th that Mr Warren Buffett was part of the deal and that the shares went up from 82$ to 90$ CAN trust me, I almost fell off my chair!!
I knew that Tim Hortons was a great company, a Canadian cash cow actually. Tim Hortons is also a Canadian Dividend Aristocrat. But, I was far from thinking that Warren Buffett would be interested in such a deal. After all, Tim Hortons is small money for Mr Buffett and most of it’s Canadian growth has been achieved already. Now, the company needs to expand abroad and even though it’s a great brand, it might be difficult to export it in other countries.
Coffee and donuts are popular here in Canada. Our weather is cold and a hot coffee is always welcome… Would it be the same elsewhere?
Tim Hortons had to close stores in the US and they recently hired a new CEO to try to expand the brand there with better results. I believe Tim Hortons is a great company and that we will see a lot of stores in the US eventually but it might take some time and at a P/E around 30, the shares became very expensive.
Under the terms of the transaction, shareholders of Tim Hortons may elect to receive either: $66.50 Canadian (approximately $59.74 USD) and 0.8025 of a Burger King share for each share of Tim Hortons they own; or $88.50 Canadian per share, or 3.0879 shares of the new company for each share of Tim Hortons they own.
This transaction brings a lot of questions. Will Burger King help Tim Hortons expand abroad? Will they only use the company for tax inversion? Will they sell Tim Hortons’ coffee in every Burger King establishments?
I want to be part of this deal and as such, I will keep my 10 shares all throughout the transaction. But, from now on, I will not add to my stake until there is less uncertainty arround that merge.
Do you own Tim Hortons shares? What’s your call?
[author] [author_image timthumb=’on’]http://quityourdayjob101.com/wp-content/uploads/2014/03/ID-10050051.jpg[/author_image] [author_info]Hi, my name is Allan. I’m the masked blogger. Like you I’m a modern slave, prisoner of a 9@5 job in Corporate America. They told us when we were young that we would live in a society of leisure and that technology would permit us to work only a couple of hours per day. But we live in a society of stress and uncertainty. My situation could be a lot worse and I know it. So many humans are suffering on this planet. But a golden cage remains a cage anyway. At least, I have an escape plan. I will retire before 45 years old over my passive income. This is a dream that is so powerful that I will make sure it happens. To build my wealth, I mainly invest in undervalued dividend growth stocks. [/author_info] [/author]
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