Buy: Equity - BKC, Burger King Holdings Inc., - $18.75
Buy: Derivatives - BKC100717C17.5, -BKC100717C20, July 17.5 & July 20 Calls
Equity Target: $20.25
Potential Event: Unknown inefficiency in dissemination of information.
Patience is a virtue, especially when trading equities.
We picked up on unusual trading activity on BKC back in June with the July options. Those options, of course, expired and although there was some trading in August and September that was interesting nothing was indicating of an impending move until Tuesday late in the day. We believe it was based on inefficiencies in dissemination of information that BKC was going to sell itself.
Wednesday morning, news on BKC was as follows:
Shares of Burger King Holdings Inc. rallied 18% in pre-market trading Wednesday, gaining after a Wall Street Journal report that the fast-food giant's in talks on a potential private-equity buyout.
The Miami-based company , which operates 12,150 restaurants in the 50 states and 75 countries, has discussed the prospect of a sale to private-equity firms in recent weeks, people familiar with the matter told the newspaper. One possible suitor is 3i Group PLC, a British private-equity firm, the Journal reported.
Burger King shares closed Tuesday at $16.45, pegging the company's market capitalization at $2.24 billion. The shares have traded as low as $16.31 and as high as $22.19 in the past 52 weeks.
It is important to note that this is a rumor and no actual buyer has been identified and as Saks, (SKS) was rumored Tuesday to have a buyer for a sale, SKS opened up high and sold off during the day.
We recommend closing out your position at the open and taking profits and we will close our alert at the open on BKC and move on and taking the rumor for what it is.
As always, we will continue to bring you timely actionable trading alerts on all our equities based on our proprietary investment program.