Posted Wednesday, December 14, 2011 10:14 AM | Contributed by Jeff
Q Investments, which owns 18.1 percent of the company that owns Cedar Point and other amusement and water parks nationwide, said in a regulatory filing that it would sell 3 million of its 10 million Cedar Fair shares over the next year, "depending on market conditions." The filing said it would make the divestment if the share price stays at or above its current $22. The Cedar Fair stock price has almost doubled in the past two years; when Q Investments initially bought into Cedar Fair, the share price was $11.45.
Read more from The Toledo Blade.
So am I the only one who wonders whether Q Investments was *intentionally* working on behalf of the Knott family, or if it just worked out that way?
--Dave Althoff, Jr.
Seems unlikely but who knows. Private equity funds have set lives (typically 7-10 years). Typically they set up another fund and need to solicit investors to subscribe. The returns of your last fund are critical in terms of your ability to raise your next one. So you don't want to take any chances (beyond normal investment risk) of producing a lower return. The Knott family may be investors in Q Funding though that would create its own set of issues.
Doubling your money in two years is a pretty good return for a private equity fund. Particularly in this market.
I seriously doubt that the Knott's are investors in Q Funding. But prior to the mysterious arrival of Q Funding just after the announcement of the sale, as a group they held the largest number of shares in the company...but not a majority (and they were not the largest single shareholder). They made it known that they weren't happy about the sale, but they didn't have enough influence to prevent it.
Along comes Q, which immediately recognized the dirty deal, bought lots of shares thus forcing the unit price up, which turned the sale from a bad deal into a downright lousy deal, and torpedoed the sale. Subsequent performance by the company has proven that the sale was unnecessary. Now the share price is back up, Q is ready to cash out, structural changes are in place, and compared to a year ago, things are looking downright rosy.
--Dave Althoff, Jr.
How does any of that indicate that Q was working (or may have been working) on behalf of the Knott family?
It doesn't. It was just a general wondering.
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