Josh Arnold
Long/short equity

Morgans Hotel Group: Woeful Operations And Board Circus Mean Sell

Overview and Thesis

Morgans Hotel Group (NASDAQ:MHGC) is a company that operates, acquires, owns and redevelops boutique hotels in select markets internationally and in the US. The company operates hotels, nightclubs, restaurants, bars and other food/beverage venues in the hotels it runs. As of the most recent quarter MHGC operated thirteen hotels, 10 of which are in the US. This company has a very interesting story behind it as Board infighting has led to a very public debate about the future course of the company in recent months.

With negative book value, unprofitable operations and negative free cash flow, I'll argue here that MGHC, despite the public attempts to attract a buyer, is vastly overvalued. The stock's volatility...

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