My Two-Pronged Investment Thesis
1,300 shares long of QSR and 14,200 shares long TAST
Total investment as of this time stamp of 10-15-22 is approximately $104,000 at a current market valuation of $88,000.
Investment highlights:
1. Returning 7% to shareholders at today's price of $60ish - Witih a 4% div. yield and having bought back 3% of its shares this year so far, that's a true return of 7% given back to shareholders on a growth story.
2. Strong FCF on a strong franchise model ensuring stable CAFD for decades to come.
3. Perfect shield against inflation and recession resistant. The main inflationary pressures such as commodity and operating costs costs are on franchisees of the business. Fast food is more resilient in recessions since fast casual diners can "downgrade." Hence, less price elastic than say fine dining, and fast food proved to be a good place to be in the decade of the '70s known for its stagflation.
4. Only one weak spot currently remains for Burger King, which is the largest income driver for QSR, and that is domestic franchisees that are experiencing flat comps (unlike the fantastic results of their International footprint). A big plan to rejuvenate the brand in the US will be unveiled in September, a month away at the time of this post.
5. TAST is a *booster* to turbo-charge this already great investment in my opinion.
Burger King's largest franchisee, which always outperforms US comps as a whole is Carrols (TAST), so they should be a beneficiary from QSR's renewed focus in rejuvenating the brand. From a contrarian perspective, it will inflate the returns on QSR dramatically when the two are tied together in a portfolio like this one with significant weight. Since TAST's units are over 90% BK units, which are the one sore spot for QSR domestically speaking, an improvement in gross margins there would be dramatic. So, the alignment of interests are there to turn this around, and both have good management.
6. BONUS KICKER: New mystery brands to be bought in the future. My personal hope is that they buy RAVE (Pizza Inn and Pie Five) one day since that is a 100% franchise model itself and would help my stock there (another unrelated investment), and give them a pizza chain they can ramp up expansion on with a much stronger capital base. Although it's probably too small at this time to be on their radar. Yet, what a great a way to go head to head with Pizza Hut one day.
ETRADE:
QSR
08/24/22 Bought 1000 of QSR @ $47.50 (Order #2033) Unassigned -47,500.00
08/24/22 Option Exercise 10 QSR Jan 20 '23 $47.50 Call(QSR) Unassigned -
06/13/22 Bought To Open 10 QSR Jan 20 '23 $47.50 Call(QSR) @ $4.41 Unassigned -4,415.10
04/08/22 Sold To Close 10 QSR Apr 14 '22 $50 Call(QSR) @ $9.50 Unassigned 9,494.83
10/27/21 Bought To Open 10 QSR Apr 14 '22 $50 Call(QSR) @ $7.72 Unassigned -7,725.10
Translation: 1000 shares purchased at net avg. cost of $51.91 -- Bought a reservation that expired due to lack of funds for dream stock, but *luckily* made small profit. Then made a new reservation and exercised it early when sufficient funding was available.
TAST
10/10/22 Bough 1000 of TAST @ $1.624 (Order #2059) Unassigned -1,624.80
10/10/22 Bought 1000 of TAST @ $1.625 (Order #2058) Unassigned -1,625.20
09/02/22 Bought 1000 of TAST @ $1.97 (Order #2041) Unassigned -1,970.00
04/27/22 Bought 1000 of TAST @ $1.67 (Order #1955) Unassigned -1,670.00
04/18/22 Bought 1000 of TAST @ $1.9568 (Order #1951) Unassigned -1,956.80
12/01/21 Bought 1000 of TAST @ $2.6466 (Order #1850) Unassigned -2,646.60
11/19/21 Bought 800 of TAST @ $3.05 (Order #1849) Unassigned -2,440.00
11/19/21 Bought 200 of TAST @ $3.045 (Order #1849) Unassigned -609.00
10/05/21 Dividend CARROLS RESTAURANT GROUP INC CASH DIV ON 5000 SHS REC 08/25/21 PAY 10/05/21 Unassigned 2,050.00
08/13/21 Bought 2000 of TAST @ $4.276 (Order #1786) Unassigned -8,552.00
07/15/21 Bought 1000 of TAST @ $4.78 (Order #1772) Unassigned -4,780.00
06/03/21 Bought 100 of TAST @ $5.715 (Order #1647) Unassigned -571.50
06/03/21 Bought 900 of TAST @ $5.7185 (Order #1647) Unassigned -5,146.65
Translation: Bought 12,000 shares over the course of a year for an avg. cost of $2.59 per share: Per share calculated: ($2.77 per share * 12000 - dividend)/12000. -- Total Investment: $31,080
MERRILL EDGE:
TOTAL INVESTMENT: $22,384 and current market valuation is $22,611
QSR
QSR = 300 shares at $53.79 per share avg. cost.
05/10/2022 (Short Term) 200 $51.25 $10,250.00 $59.09 $11,818.00 +$1,568.00+15.30%
10/25/2021 (Short Term) 100 $58.87 $5,886.50 $59.09 $5,909.00 +$22.50+0.38%
TAST
TAST = 2200 shares at $2.84 per share avg. cost
05/02/2022 (Short Term) 1,000 $1.58 $1,575.00 $2.22 $2,220.00 +$645.00+40.95%
08/13/2021 (Long Term) 1,000 $3.85 $3,845.00 $2.22 $2,220.00 -$1,625.00-42.26%
07/19/2021 (Long Term) 200 $4.14 $828.00 $2.22 $444.00 -$384.00-46.38%
