Mark Cuban's Investment In Movie Chain Reading International (RDI) Should Have A Happy Ending
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Billionaire Mark Cuban, the owner of the Dallas Mavericks, is known for his fiery temper, never-ending enthusiasm, and acute business savvy. When he's not court-side, or working on his HD initiatives, Mr. Cuban dabbles in the stock market. Mr. Cuban is not just your everyday billionaire-gone-crazy with his investments. When he takes a position or makes a move it is something you need to take notice of.
A few weeks ago, we noted that Mr. Cuban filed an initial 13G showing a large stake in Reading International B shares (NYSE: RDI.b), the owner of multiplex cinemas and various real estate. Cuban was not content with this, and earlier in the week Cuban disclosed he increased his position in the B shares and also went after the much-more liquid A shares, or Reading International Inc. (NYSE: RDI). Cuban showed an initial 500,000 share stake in the A shares. We were told that Cuban went for the A shares, because he already bought all the free-float of the B shares, which are the voting shares, and mainly controlled by Reading International founder James Cotter and his family. Cuban now owns 13.9% of the Class B shares and 2.4% of the Class A.
The story on Reading International gets more interesting when you look at the fact that Mr. Cuban is not just owner of the Dallas Mavericks and HDNet, but he's also part owner of Landmark Theatres, the biggest independent art house movie theater chain in the U.S.. Cuban knows movies and movie theaters, so an investment in Reading International looks to be right in his wheelhouse.
Cuban also has an impressive short-term track record of investing in publicly traded movie chains. In December 2008, Cuban disclosed a 9.4%, or 1,200,000 share, stake in Carmike Cinemas, Inc. (Nasdaq: CKEC). Cuban paid $2.30 per share for the stock and it currently trades at $7.91 - that's an amazing 250% return!
Could RDI see the move that Carmike witnessed? That would seem unlikely short-term, but last summer RDI was trading at $9 per share. A double in RDI is entirely possible. Also, because Cuban is a Form 4 filer in the stock he can't quickly flip it without paying repercussions. So he is likely in for the long-haul.
In addition, Reading International should also benefit in the short-term as it will be included in three Russell indices -- Russell 3000, Russell Microcap and Global Indices. The addition will force funds to add the stock to their portfolios. The buying could help close the historic gap between the A shares and B shares.
Fundamentally, Reading may look like more of a challenge and this could explain why no analysts cover the stock. But what may appear to be Reading's weakness, its Enterprise Multiple, or Enterprise Value dividend by EBITDA, could see significant improvement.
Reading is the number 2 movie exhibitor in New Zealand, the number 4 movie exhibitor in Australia and is number 13 in US and is also a large land holder in the U.S, New Zealand and Australia. To improve its capital ratios, Reading is moving to monetize assets, including selling part of its land holdings. The company is expected to report a sizable $11.5 million non-recurring gain in the June quarter from a recent $22.9 million debt retirement. The debt retirement was a smart move and will save the company $2 million per year in interest payments. Reading is also rumored to be a bidder for the master franchise of Burger King New Zealand, which would further contribute to the top and bottom line at Reading.
So while you may never be a billionaire yourself, you can invest like one by buying Reading International 'A' shares (NYSE: RDI).
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Reading moving stock listing to NASDAQ
lawndale1 on Jul 27, 2009 05:12 PMJuly 23, 2009 1:00 PM EDT LOS ANGELES, July 23 /PRNewswire-FirstCall/ -- Reading International, Inc. (NYSE Amex: RDI) announced today that it will move the listing of both classes of its common stock from the NYSE Amex stock exchange to The NASDAQ Stock Market LLC (R). Effective Tuesday, August 4th, Reading's class A nonvoting common stock willtrade under the symbol, NASDAQ: RDI, and its class B voting common stock will trade under the symbol, NASDAQ: RDIB. Reading decided to switch to the NASDAQ after careful consideration of capital market alternatives and analysis of the electronic market model, which provides added visibility to investors. Reading believes that, as the world's largest electronic stock market, NASDAQ's electronic multiple market maker structure will provide Reading with enhanced exposure and liquidity, while at the same time providing investors with what Reading believes are the best prices, the fastest execution, and the lowest cost per trade. Reading anticipates a long and beneficial relationship with the NASDAQ stock market. About The NASDAQ Stock Market LLC (R) The NASDAQ OMX Group, Inc. is the world's largest exchange company. It delivers trading, exchange technology and public company services across six continents, with over 3,900 listed companies. NASDAQ OMX Group offers multiple raising solutions to companies around the globe, including its U.S. listings market; the OMX Nordic Exchange, including First North; and the U.S. 144A sector. The company offers trading across multiple asset classes including equities, derivatives, debt, commodities, structured products and ETFs. NASDAQ OMX Group technology supports the operations of over 70 exchanges, clearing organizations and central securities depositories in more than 50 countries. For more information about NASDAQ OMX, visithttp://www.nasdaqomx.com. About Reading International, Inc. Reading International (http://www.readingrdi.com) is in the business of owning and operating cinemas and developing, owning and operating real estate assets. Our business consists primarily of: -- the development, ownership and operation of multiplex cinemas in the United States, Australia and New Zealand and -- the development, ownership and operation of retail and commercial real estate in Australia, New Zealand and the United States, including entertainment-themed retail centers ("ETRC") in Australia and New Zealand and live theater assets in Manhattan and Chicago in the United States. Reading manages its worldwide cinema business under various different brands: -- in the United States, under the -- Reading brand, -- Angelika Film Center brand (http://angelikafilmcenter.com/), -- Consolidated Theatres brand (http://www.consolidatedtheatres.com/), and -- City Cinemas brand; -- in Australia, under the Reading brand (http://www.readingcinemas.com.au/); and -- in New Zealand, under the -- Reading (http://www.readingcinemas.co.nz) and -- Rialto (http://www.rialto.co.nz) brands. For more information, contact: Andrzej Matyczynski, Chief Financial Officer Reading International, Inc. (213) 235 2240 SOURCE Reading International, Inc.