Six Flags Stock Price

My most refined dislike is for private equity. That something intended to build value consistently does the opposite is a real head scratcher.

It’s not designed to build value so much as generate shareholder value. Those aren’t necessarily the same.

Value is in the eye of the beholder. In terms of returns to investors, private equity firms on average generate higher returns than major stock indices with many significantly higher.

But value to investors doesn't exist in a vacuum. Creating value for investors without creating value for some other constituency group(s) is like bringing down the cost of living; easier said than done.

"Value" to me is a sustainable business. I'm sure there are example of PE-owned businesses that got closer to that, but I've seen and worked for far more that went the other way.

Way too stupid to pick winners and losers, I just buy them all. VTI and chill forever.

Most people whose job it is to pick winners and losers for client's investments don't beat the market. So, index funds would be better for them too. But they couldn't charge their clients the same fees to put them into index funds.

EDITED for revised lowest price today: With today's gloomy news about Saudia Arabia cancelling oil shipments to Europe for October delivery, the market has been down most of the day. Six Flags hit a new 52Week low today, $12.00. (previously $12.14)

I'd be very careful if anyone is tempted to "buy the dip".

EDIT: Breaking through the $12.00 mark would be a bad sign. For all the math and algorithms in stock pricing, there is still emotional/pshychological impact in crossing certain price points. if it actually touches $11.99, there's no telling how fast it could drop to $11.01. (or conversely be seen as super cheap and time to load up). Either way it could be volatile

And here it is:

Jana Partners rearing their head on cue

Jana Partners demanding the company hire an Investment Bank to sell the company.

In this environment we all know what that will look like.

Given the recent stock price it’s a certainty that Jana is underwater on their investment.

Well, yes. And I'm not quite sure what a sale will accomplish. Maybe existing shareholders get a premium over the stock price, but it still leaves you with a company that can't outperform its debt obligations.

And given that, who exactly wants to buy this company?

From my 5 minutes digging into the wonderful Mr Rosenstein and JANA Partners it sounds like they "target underperforming companies" to begin with. But wouldn't forcing a sale at a lower price (if they're indeed "underwater") actually lock in their short-term capital loss? What's the end game?

I think we all know the end game. More second tier parks sold and/or closed and continued cuts and a poorer guest experience at the rest.

Yeah I'm just wondering what does Jana get out of forcing a sale. Their Whole Foods / Amazon deal looks like it netted a 10+ dollar profit per share. Wouldn't this be selling into a loss? (I'm probably naive about what other motives or possibilities are there.)

As of 4pm today Six Flags has:

Market capitalization: $1.27 billion (market close of $12.43)

Debt: $4.97 billion (June 2026)

Jana Partners have lost their shirt, tie, and hat thus far on their investment; welcome to the club with Cedar Fair investors who weren’t given a vote in this merger! Selling the company is a fallacy, nobody wants “the company” or the Six Flags brand which is worth garbage now. Jana could force the board/Reilly to sell parks other companies would buy: Knott’s Berry Farm, Cedar Point, Canada’s Wonderland, and Kings Island produce all the revenue other companies would like to capture and each would come with a price tag high enough to make a serious dent in total debt.

As a 9% shareholder, not sure there is much Jana can "force" Six Flags to do. They can "demand" the company's board do a lot of things. But board doesn't necessarily need to follow those demands. They can send letters to the board. And leak those to the media. They can threaten a proxy fight to replace the existing board members with people who would support a sale. But its not clear that fight would be successful. Though the stock was up today by about 1% on a down day for the overall market so there may be more people who support a sale than just Jana.

We talked about the "sell the company" issue when Jana first raised it months ago. It the company was a conglomerate with subs in different industries/markets, a sale of the parks could make more sense. But as it is, parks are all the company does/has. Disney could sell off its parks division and still have a functioning company. But if it sells the parks, Six Flags doesn't have anything. Better to just change management (assuming you view that as the issue). Selling off parks with lower returns on investment could make sense. Or those for which the real estate may have higher/better uses.

Selling the crown jewel parks as it were and using the proceeds to pay down debt only works if what is left (and the remaining debt) is a solvent entity. Board won't approve transactions that leave the company insolvent (from a going concern point of view).

Though putting aside Jana, if you look at the changing demographics in the US, increased entertainment/travel/leisure options and fact that destination parks continue to add capacity, I think it makes sense to expect there to be fewer regional parks going forward. Quality management will be influential in saving some of them (as will things such as location). But it won't be sufficient to save them all.

Gunkey Monkey

Jana could force the board/Reilly to sell parks other companies would buy: Knott’s Berry Farm, Cedar Point, Canada’s Wonderland, and Kings Island produce all the revenue other companies would like to capture and each would come with a price tag high enough to make a serious dent in total debt.

So basically Cedar Fair on June 30, 2024.

What an absolute disaster this merger has turned out to be for Cedar Fair unitholders, employees, guests and the parks themselves.

The blame should be solely put at the feet of the 2023 Cedar Fair board for not heeding Ouimet's advice of not going through with this merger. Of course, not a single one of those people is still on the board to deal with the fall out nor are any of Cedar Fair's executive management team from that time period - except for the Chief Accounting Officer.

As all of this has reverberated into other recent threads, I keep thinking of Ouimet's advice and the obvious red flag of of Cedar Fair shareholders being blocked.

And the price that is currently being paid by Cedar Fair's legacy parks...from employees to guests...who have inherited all the crap.

I don't think rock-bottom has been hit yet. And on top of all that, the X2 mess seems to be just beginning.

It's wild that the mistakes of legacy Six Flags are now putting Cedar Point and Kings Island in jeopardy. Things I never would have believed just a few years ago.

Maybe I'm oversimplifying this, but does everyone forget that Cedar Fair came into this with more than $2 billion in debt? I get it. Six Flags was probably the weaker of the two, so it's easy to put the bulk of the blame on their end. Cedar Fair was far from a victim.

Difference is Cedar Fair parks were (and are) performing. The Six Flags parks are an absolute drag on the financials.

When Zimmerman and Witherow were still in the CEO and CFO roles, they made a comment during an investor presentation that they under-estimated the state of the Six Flags parks and the turnaround effort required.