Still image from Blackfish
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Stock of SeaWorld Entertainment has plunged 31.51 percent this morning (August 13) to $19.18. Earnings per share in the second quarter were 43 cents, down from the 59 cents Wall Street analysts expected. Revenue was down sharply, too, in the quarter.

The company expects revenues to fall 6 percent to 7 percent this year. SeaWorld has been hurt by the documentary Blackfish, which came out about a year ago and called attention to alleged mistreatment of orca whales.

Some egg is coming off my own face. When the stock came out in April of 2013, I thought it shined and stunk like a mackerel in the moonlight. It was loaded with debt because Blackstone Group had taken it over in 2009, and in the process (normal for private equity group takeovers) had piled up debt so the Blackstone folks could be paid a huge dividend. And the stock's valuation measurements compared poorly with stocks of comparable theme park companies.

Further, Blackstone's deal had the smell of dead fish. It had taken over SeaWorld through Cayman Islands financial groups. The Caymans are a tax and secrecy haven that private equity groups use to avoid United States regulations and/or taxes. (Remember Mitt Romney's deals in the Caymans?)

But as many initial public offerings do, SeaWorld stock zoomed from the mid-$20s to the mid-$30s.

I would not be surprised if it has further to go on the downside.

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Comments

MGLAND Aug. 13, 2014 @ 11:56 a.m.

"I would not be surprised if it has further to go on the downside." With the announcement of the stock buyback I think the company feels the same way

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Don Bauder Aug. 13, 2014 @ 2:12 p.m.

MGLAND; When an initial public offering soars -- and remains in levitation -- I always have the suspicion that the stock is being manipulated. Certainly, SeaWorld management would know if the stock has been artificially supported for so long. So you may be absolutely right. Best, Don Bauder

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Don Bauder Aug. 14, 2014 @ 12:55 p.m.

SEAWORLD STOCK HIT AGAIN. With only a few minutes left in trading today (August 14). SeaWorld Entertainment stock is being belted a second day in a row. It is down 4.87 percent to $17.98. Best, Don Bauder

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Don Bauder Aug. 14, 2014 @ 10:16 p.m.

shirleyberan: This is another sad story of a company that a private equity group takes over, ladens with debt to pay off the buyers with dividends so the private equity cozeners have little money in the deal, and thus harming a company. Frankly, these deals in which takeover bandits take over companies with the companies' own money, piling debt on the target, should be made illegal. It is disgraceful that the former head of such a private equity group actually ran for president of the country. Best, Don Bauder

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Scott Marks Aug. 15, 2014 @ 6:24 a.m.

Every now and then movies actually have the ability to change the world. I was hoping that would be the case with "Blackfish," but instead of the wrecking ball there's now talk of expansion. I guess people just can't get their fill of water rides and the man-made penguin Auschwitz. On the bright side, there will soon be more space for potential deaths and injuries to occur. Coming soon, "Blackerfish: the Sequel!"

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Don Bauder Aug. 15, 2014 @ 6:42 a.m.

Scott Marks: "Blackfish" didn't change the world but it did dent SeaWorld's earnings and stock price. As of yesterday, the stock is at about half of its high after the IPO. That is good. Private equity groups, such as the one that took over SeaWorld, which pile debt on the target company to pay themselves fat dividends, should suffer...greatly, very painfully, very bloodily. Best, Don Bauder

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Ponzi Aug. 15, 2014 @ 8:16 a.m.

Is Sea World management just in the habit of lying? They announce they are going to expand the size of the Orca tanks in San Diego first. Just like that. No approval from the California Coastal Commission, no approval from their landlord, the City of San Diego. No construction bids, no studies, no environmental reviews. While the neighbors are trying to end their noisy fireworks, PETA is protesting and Blackfish downloads from Netflix are at an all-time high, Sea World behaves as if they can expand their tanks and appease everyone.

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Don Bauder Aug. 15, 2014 @ 12:57 p.m.

Ponzi: A corporation can probably getting away with telling the public and its investors that it intends to expand its Orca tanks before it takes any steps in that direction, such as the one you mentioned. In fact, you could argue that the company has to make such a revelation to shareholders, as long as the announcement is hedged -- depending on approvals, etc. Best, Don Bauder

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Ponzi Aug. 17, 2014 @ 11:01 a.m.

Along with the earnings announcement on August 13, 2014, the Sea World included this detail: “Entered into a Letter of Intent with Village Roadshow Theme Parks, a division of Village Roadshow Limited, a leading international entertainment and media company, to co-develop theme parks in Pan-Asia, India and Russia.” This partner already operates SeaWorld Gold Coast Australia, presently sans any Orcas.

I speculate that the “new and improved” tanks are more purposefully intended to improve the conditions for breeding and that SeaWorld will begin to export domestically bred whales to parks in Russia, India and China. If the activists want to stop the captivity of the whales, they need to block any expansion of their breeding facilities.

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