Fun and Games with Jarden
Walk into a Wal-Mart and seemingly every other item has some connection to Jarden.
You're wearing out things that nobody wears
You're calling my name but you gotta make clear
I can't say baby where I'll be in a year..."
-Sweet Emotion (Aerosmith)
In 1975 I started to build my album collection, and one of the first records I bought was "Toys In The Attic" by Aerosmith. Aside from containing "Walk This Way" and "Sweet Emotion", it was one of the coolest album covers that I had ever seen. At any rate, I heard Steven and the boys last night driving home and I went to bed thinking about a company that has really cool toys in its attic.
Jarden Corporation (JAH), according to its website, "is a leading provider of niche consumer products used in and around the home." You want to talk about "toys"?
It makes Bicycle playing cards, Abu Garcia, Mr. Coffee, Stren fishing line and all things Coleman. And that is just to name a few! Walk into a Wal-Mart (WMT) and seemingly every other item has some connection to Jarden.
Lately, with the "death of the consumer" making headlines just about every day - consumer product stock performance has been anything but inspiring. Jarden has not been spared. After making a 52 week high of $45.09 earlier this summer, the stock has fallen from the attic to the basement bottoming out around $29.50 a few days ago. But something caught my eye. While reading Barron's Inside Scoop the other day it made mention of the fact that since July 31, Jarden insiders have purchased more than $3.3 mln worth of stock. The bulk of that buying interest has come from Chairman and Chief Executive Officer Martin Franklin, who now owns close to 8% of Jarden stock.
Much like Danaher (DHR), Jarden's growth comes largely from acquisition, the latest being its deal for K2 Inc. that was closed on August 8. With all these deals, this has been a tough stock for "the Street" to get its arms around as acquisition related integration costs and one time charges make deciphering earnings more difficult than understanding anything that Michael Stipe from REM is singing - but I digress.
For a trade, I think Jarden is pretty compelling at these levels. This precipitous drop in the stock is now without precedent as we have seen a similar move lower in September 2005 with some smaller moves along the way. Each pullback has proven to be a nice buying opportunity and short of people going cold turkey on poker or fishing, I think this move lower will be no different.
The possibility of "accounting irregularities" always exist with companies that make so many acquisitions. However, under the leadership of Martin Franklin and his management team, I for one, do not think there are any skeletons in the closet. Toys in the attic, yes, but skeletons? None that I can see!
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