Travis Kelce partners with Jana Partners to influence Six Flags

Based on the headline I was annoyed to see them wasting money on an endorsement deal but this is actually interesting.

He is from Cleveland Heights and they talk about Family Trips to CP all the time on their podcast.

If nothing else, maybe this sets the stage for a future investor group who might buy out certain parks in the portfolio if/when it comes to that.

Kelce brothers have built an impressive investment portfolio. $100 million over 3 years for their podcasts. Garage Beer. Travis has leveraged his relationship with Taylor Swift (as has the NFL). Travis and Jason were both born in Cleveland. Went to college in Cincinnati.

Not uncommon to pair celebrities with certain investments. Tie in to Cedar Point/Six Flags for Travis makes sense. What Jana is able to do with it remains to be seen.

Maybe T-Swizzle will just by the whole thing with some of her spare change.

Jana doesn't hold anything for more than a couple years. Their MO is to push for moves in valuation (cost cuts, asset sales) then pressure for a sale of the company once the valuation happens.

Kelce is probably there to help them turn it into a meme stock. Fundamentals don't matter, but any hint of good news (probably from the result of asset sales) and the fact that Kelce makes it look cool to own and talk about will have young people buying in. It probably wont go to the moon, but all Jana cares about is getting a decent bump. I'd bet neither are associated with whatever ownership looks like for the parks in 5 years.

To me regional amusement parks were never about quick growth or huge valuation increases. It was best when FUN was dependable long term investment that you know is going to generate cash every year and get you a high single digit dividend.

I wouldn't bet against them, but the activist investing which worked for them in other business might not work for amusement parks necessarily. They say they are pushing for tech improvements which I know they can use, but their core product is what needs work more than anything. Saving 5 cents on a transaction over a 3rd party like Accesso isn't going to turn a magic profit. Also finding better way to figure out and tell me the wait for X coaster is 240 minutes isn't going to move the guest experience needle much unless you do something about that 240 minute wait.

Here’s the tell. The story says they own an “economic interest”. It doesn’t say they own 9% of the stock. That’s not a simple mistake it’s a calculated use of language.

It would appear that they may have bought the debt. Perhaps at a significant discount. Debt trumps equity in a BK.

That may be their play.

Thanks for pointing that out, it did seem off that that $200m gets you 9% of the combined company, and Sea World Ohio sold for $210m twenty five years ago.

In-park technology does not have a great long-term track record. I think there are some that regret Genie+ and Lightning Lane from a guest experience standpoint, but know that you can't go backwards now. I don't want more apps when I visit a park, I just want every ride to be open and running efficient so I don't need the app to begin with. I suspect most want to visit parks this way.

Wall St Journal article (which is behind a paywall) says they own shares. Says they own stock. Trust WSJ more than I do CNBC in terms of getting a business story right. WSJ article also indicates that FUN stock went up 18% after the announcement giving Six Flags a market value of $2.6 billion. Prior to 18% increase, market cap would have been about $2.2 billion. 9% of that is about $198 million.

10% equity ownership would trigger certain insider reporting requirements. So it makes sense they would stay under 10%.

You may be right GoBucks, but I usually trust CNBC reporting on business matters. It’s not like they’re USA Today. I don’t often see “economic interest” in an otherwise standard “activist investor has purchased X percent of the shares of Y company” story. The template is pretty standard. To use this very arcane language just seemed so unique that it caught my attention.

If one thinks you can make a change and drive up the stock price you buy the shares, if you’re looking to pick up the ashes after an impending wipeout that no one will be able to prevent, you buy the debt at distressed prices, credit bid in a Chap 11 filing, and essentially convert your debt (at par value) to equity of the reorganized company. Jana knows that routine. You can also buy the debt at distressed prices and ride along with someone else’s attempt to raise the stock price (in this case debt and equity move in the same direction, but at different velocities). Still a win for Jana and Kelce.

however, the more likely story is they bought stock, and the Initial article was just poorly written or AI crafted with no editing

Agree its an odd reference. I am not even sure how you would figure out a percentage that someone holds of a company if they hold debt. Given the outstanding debt of Six Flags and number of shares issued/outstanding, what does 9% mean if its just a debt ownership (or combination of debt and equity)?

Its odd in that I first saw the report on WSJ yesterday. Then saw it on the newswire link below (which indicates its news provided by Jana Partners. And that new release references "economic interest."

https://www.prnewswire.com/...90589.html

But if you check press releases on Jana's site, you are linked to the WSJ article (which references "shares").

https://www.janapartners.com/Media_

I get the bankruptcy angle. Just not sure with a market cap north of $2 billion, how many lenders would be interested in taking a haircut. Six Flags releases Q3 earnings in two weeks. Will be interesting to see their results (and any guidance/info they provide with respect to October, pass sales, etc).

If they bought shares or anything that gives them the right to own shares (including convertible debt, warrants, or options), they would have to report a position greater than 5% of shares outstanding in a 13D filing. I believe they would have to report that within 10 days.* So we would know within a couple weeks. There's nothing on Edgar yet.

If they acquired regular debt that they could use for a kind of debt-equity exchange, but that doesn't explicitly give them the right to acquire shares, that would not be reportable.

*I may be misremembering things from my compliance days - it's been a while - and I was never a securities lawyer, just an application manager.

ETA: Here's the beneficial ownership rule and here's the summary of 13D/G filings.

Also, if they exceed 10% in shares they'd be subject to short-term profit disgorgement, which would impact their strategy of selling within a couple years.

Ehhh, this is also interesting. From the Wall St Journal report:

New York-based hedge fund Jana Partners, the National Football League star and other investors have a combined stake of about 9% of the theme-park operator’s shares, or $200 million. [emphasis added]

So Jana could have put together a consortium without actually holding all of the 9% itself. I'm not really sure how that works with respect to reporting rules; if they're acting in concert they might have to report as if they are a single investor. It's all a bit unclear at this point. Maybe we'll find out more, maybe we won't (at least until Jana publishes their 13F, which won't happen until mid-February).

Bloomberg's Matt Levine, who is always interesting, covered it in his newsletter today.

I’m wondering if “equity interest” somehow got mistranslated to “economic interest”. Nothing more than that?

I agree it’s probably shares, a group of Jana and others, including Kelce, acting together, who I believe must report as a consolidated value to avoid running afoul of securities disclosure rules.

again, I think it’s nothing more than a transcription editing error, but once again this group (sometimes) knows their stuff.