For his Small Cap portfolio, Covestor model manager Derek Pilecki looks for companies “with strong competitive advantages, attractive business models, and management teams that think like shareholders.” Derek, portfolio manager at Tampa, Florida based Gator Capital, generally holds 30 stocks in this model. Current top holdings are Brigham Exploration (BEXP), Newcastle Investment Corp. (NCT), Fossil (FOSL), DineEquity (DIN) and Rex Energy (REXX).
On February 17, Derek added Red Robin Gourmet Burgers (Nasdaq: RRGB) to the model. Late Thursday (2/17) Red Robin reported earnings, as summarized by AP:
it earned $2.2 million, or 14 cents per share, for the last three months of the year, versus $1.6 million, or 10 cents per share, in the same quarter last year… Revenue rose 6 percent to $192.6 million from $182.2 million… The results easily beat analyst expectations of 3 cents per share on revenue of $191.8 million, according to data from FactSet. Shares of the company spiked $2.94, or nearly 14 percent, to $24.06 in midday [Friday] trading.
Jim Royal at Motley Fool is “grouchy” about RRGB earnings, despite the stock’s jump (he’s long):
The company plans capex at $39 million to $41 million this year, and will open 10 company-owned locations in 2011. Each restaurant costs about $1.8 million to open, which adds up to a planned $18 million in new stores for 2011. I’m less than thrilled with the company’s continued expansion, as long as same-store sales remain so iffy. And the company plans five more locations for 2012. I’d rather that Red Robin focus on generating free cash flow, especially since the company is trying to renegotiate its credit agreement in the next few months.
Sources:
“Red Robin shares jump on 4Q results” Associated Press 2/18/11
“One Fool’s Beef With Red Robin” by Jim Royal, Motley Fool 2/18/11 http://www.fool.com/investing/small-cap/2011/02/18/one-fools-beef-with-red-robin.aspx
