Playboy stock jumps 40% today on news that Hef will buyout all shares - insider trading question???

[cbdo2007]

Isn't it strange that their stock has been stuck in a serious slump, then first thing this morning news comes out that Hef wants to buy out all of the remaining shares for $5.50 each, when last Friday they were sitting at $3.90 each, so the price instantaneously jumps to $5.50? with 1/3 of the shares changing hands today?

Who investigates this stuff and wouldn't this be an obvious red flag of insider trading or stock manipulation? I see some people are looking into it, based on the Google Finance page for Playboy, but this is just nuts. Sure, if one of my stocks jumped 40% in one day I would sell it too, but there's got to be someone out there who knew this would happen and profited.

[SunnySong]

1. Well Hef knew obviously... Look you can do this with pratically any public company...

Borrow a few million or billion and announce a takeover price. It is done all the time...

I see zero red flags here and unless you were short the bunny I have no idea why anyone would care.

[Old and In the Way]

2. I have no idea why Hef would want to buy up the outstanding shares.

I don't see Playboy as a viable longterm business anymore. They're giving it away on the internet and, sure they have some great articles, but it's still a magazine and it has to be faced with the same industry problems: declining readership and declining ad revenue.

There's probably a lot of stockholders willing to sell to Hef...just don't know why he wants to buy.

[MercutioATC]

3. I see two possibilities...

1) Hef's getting senile.

2) He's got a big brand extension in mind, has more than enough cash to do it, and wants to capitalize on the returns.

[zipplewrath]

4. It's a brand

Forget the magazine. Forget the clubs (are there any left today?). It's a brand. They long ago stopped making alot of cash on their magazine. They sell alot of stuff through the Playboy brand. They are big into porn. Hef's basic problem with the way the company is being run right now is that they are "over branding" and putting the bunny logo on just about anything. He's probably right. Playboy sustains its brand as someplace between GQ and Hustler. Move too far in either direction and you'll find alot of competition. Maintain that middle ground and you maintain the brands unique market.

I've heard that Victoria's Secret has a similar problem. They have to position themselves somewhere between Fredrick's of Hollywood and Bloomingdales. Move to far in either direction and they lose their market.

[cbdo2007]

5. True dat! It ain't the naked ladies anymore that are the $$$ it's the bunny logo and the Playboy

name.

Licensing of the bunny logo is already their biggest asset. They just need to expand that piece and let the magazine work as advertising for it. Really the sky is the limit with that bunny and the "Playboy" name.

[Statistical]

7. However how much is the brand worth.

Not much is look at the financials. You are right about the brand. Branding made up about $9 mill in revnue vs $2 mil from the magazine and other content. Even with that revenue the company is solidly in the red.

Still it isn't that powerful of a brand. In the 1970s maybe but not really anymore. I don't see the company significantly growing the brand over next decade.

Personally playboy just makes me sad. It reminds me of my past and simpler days. Hef (what is he 90 now) parading around in pajamas with a bunch of 20 year old models. Ouch. I mean it was cool when he was younger now it just comes across as pathetic.

Maybe I am wrong and Hef is a genius that is going to reinvest Playboy 2.0 but I doubt it.

[zipplewrath]

8. I'm a bit like you

He's pissed because he thinks they are weakening the brand. My personal perception is they are desperate to keep the company afloat.

Maybe he has some great idea, I dunno. I kinda think the day and age of the "playboy" has gone on by. Truth is, if he started a line of men's clothes, the most likely customers would be gay men.

[Statistical]

9. Yeah I mean look at the balance sheet there is a reason this was $3 stock.

Last year net income was -$51 million.

The company has about $20 million in cash and total assets of about $196 million.
The company owes about $219 million in debt and liabilities.

Equity is negative 22 million. The company is essentially worthless. I expect it to be bankrupt in a decade anyways. I mean the brand can't stand alone. The brand worked because in the 70s/80s the brand represented a lifestyle. Once the brand gets watered down by being plastered on anything & everything what value is there? Nothing.

If we wants to do this let him but if I was a shareholder I would be glad I am selling it at $5 today instead of $3 yesterday and consider than extra 40% a gift, cash it and never look back.

[zipplewrath]

10. To some extent he agrees with you

His primary complaint is "over" branding. Watering it down so to speak. But a bit like you, I'm not sure there is enough branding opporunities available to make it useful in the out years. Heck, I'd bet the 20 somethings barely know what the bunny and Playboy is much less what it is suppose to represent. This is the "hooking up" generation. Not much call for women in bunny outfits. But then, I'm not worth what he is. Maybe he knows something I don't.

[Statistical]

6. What red flags.

Stocks up all the time on takeovers. Either rumors or real takeovers.

Generally speaking to get shareholder approval for a takeover the bid amount is 50%-200% of market price. So for example company X wants to buy company Y. Company Y is selling for $10 per share. Company X may be $15 to $30 depending on how badly they want and/or how undervalued they think it is.

On news company Y jumps to close to takeover price.

[ParkieDem]

11. This isn't insider trading.

It's simply an offer by Hefner to buy all the outstanding shares. When these offers are announced, stock prices naturally go up to what the offer price is.

Now, dig a little deeper and you'll see that plaintiff's law firms are already all over this -- because it's an out of the blue offer, they have legitimate questions about how it came about and whether it will be a good deal for shareholders. There may be some insider trading questions, but the mere announcement of a buyout offer like this is not insider trading. If Hef were to turn around and sell a chunk of his PLA holdings (which he can't do under numerous SEC regulations), then yeah, it's manipulation.

[Po_d Mainiac]

12. Da real story

One of the week's biggest media stories has been Hugh Hefner's $185 million proposal to take Playboy private and a competing $210 million bid from Penthouse magazine's parent company, FriendFinder.
snip
But Playboy Enterprises is transitioning into a "brand management company," and as a corporation, it has a lot more going on than just the magazine.
snip
The company is still losing money, but less than it used to.

http://www.businessinsider.com/heres-everything-penthouses-parent-company-would-get-if-it-bought-playboy-2010-7

Poor old Hef seems to inflated more than his Willy....And an STD infested bunch from FriendFucker would get Marilyn's pictures
:wow: :wow: :wow: :wow: :wow:

[Taitertots]

13. The real question is: What does Hef know that he is keeping a secret? n/t