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Ron Baron Sells Shares of The Cheesecake Factory

July 10, 2009 | About:
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guruek

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(GuruFocus, July 10, 2009 ) Investment Guru Ron Baron has reduced his position in restaurant operator The Cheesecake Factory (CAKE). GuruFocus data shows that on July 9, 2009, Ron Baron reduced his holdings by 11.06% to 2,333,160 shares at the price of $16.4 per share.

Ron Baron initiated a position of 6.1 million shares in CAKE in the third quarter of 2006. He increased his position to 7.7 million shares in 2Q07. He held this position for three quarters until 1Q08. CAKE stock price was well above $20 per share. But since 2Q08, he was seen steadily selling his shares, and by the end of 1Q09, he only has 2.6 million shares. The sale on July 9 reduced his holdings even further.

The Cheesecake Factory operates many upscale high volume casual dining restaurants. Cheesecake Factory Inc. has a market cap of $957.4 million; its shares were traded at around $16.4 with a P/E ratio of 20 and P/S ratio of 0.6. Cheesecake Factory Inc. had an annual average earning growth of 21.8% over the past 10 years. GuruFocus rated Cheesecake Factory Inc. the business predictability rank of 4.5-star.

On Apr. 23, 2009, the company reported financial results for the first quarter of fiscal 2009, which ended on March 31, 2009. Total revenues were $392.8 million in the first quarter of fiscal 2009 as compared to $393.8 million in the prior year first quarter. Net income and diluted net income per share were $10.0 million and $0.17, respectively. Comparable restaurant sales decreased 3.4% in the first quarter of fiscal 2009 from the first quarter of the prior year.

“A significant upturn in comparable restaurant sales as compared to the fourth quarter was the principal driver of our better than expected earnings per share in the first quarter,” said David Overton, Chairman and CEO. “Guest traffic in our restaurants improved sequentially from fourth quarter levels by almost three percentage points, which is noteworthy relative to trends that we saw throughout last year and also reflects competitively strong performance.

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Rating: 3.4/5 (5 votes)

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