107Sid

Paired Trade: Sell DineEquity, Buy Hormel

Alan! Alan! At least you admit that your knowledge of DINEequity is limited and essentially you're shooting from the hip. In the past four months the stock has increased more than five-fold and you could have made the same arguement back in March when the stock was selling for less than $6 a share.

While the stock can obviously go down (as all stocks can) especially after enjoying big run, do your homework and you'll be able to figure out why it had the big pop. CEO Julia Stewart had done a marvelous job since taking over the old IHOP which she successfuly turned around and put on a new growth path. Prior to joining IHOP she had been head of operation at Applebee's and knew the company inside and out when she had IHOP acquire it on a highly levered basis, financing it via debt. Since then she has not only made progress in repositioning Applebees (which is not fully completed yet), but has been selling-off company operated units to franchisees, not only igniting important streams of franchise fee income, but generating cash from the sale of these units to reduce the debt.

Julie Stewart is a proven winner; don't sell her short.....especially when you admittedly are not that familiar with the company.