"This one is on fire because people think they're going to get bought. I'm not going to risk it; ring the register and take the gain." "Mad Money Lightning Round," 4-28-09

Fine Capital Partners reported ownership of 1,569,206 shares (5.6%), after buying 531,200 from Aug. 14 to Oct. 10 at prices that ranged from $24.12 to $33.69. Coinstar operates machines that let consumers exchange coins for bills.

redbox

Tatro is also bullish on Coinstar which he thinks could prosper in a rough economy as people convert their loose change into dollars. He recommends this stock as a buy with a stop at $28. Be careful of this stock, counters Karen Finerman. There’s a proxy fight going on. Macke said he is surprised by the breakout in Coinstar, and he would look into the name.

Shamrock Activist Value Fund intends to nominate three candidates for Coinstar's board at the company's 2008 annual shareholder meeting. Shamrock, a California investment firm run by Walt Disney (DIS) founding-family member Roy E. Disney, has been asking Coinstar to make corporate-governance changes and de-stagger its classified board structure. Shamrock said its three nominees are Eugene I. Krieger, John M. Panettiere and Arik Ahitov. Shamrock currently holds about 3.7 million shares (13.39%).

Not only are they are beating numbers but they’ve entered a big deal with Wal-Mart. He thinks this stock could jump as much as 100% in one year.

good business model

From Barron's 6-18-07:

Funds including Shamrock Activist Value increased their position to 2,316,445 shares (8.3%) from the 2,022,665 (7.3%) reported on Feb. 27.

From Barron's 4/16/07

"Since 2005, Coinstar has invested $32 million for a 47.3% stake in DVD rental-kiosk operator Redbox (McDonald's Ventures owns an equal percentage). As Coinstar only reports its 47.3% share of Redbox's net income or loss on its income statement (below the line), its contribution is not reflected in our earnings before interest, taxes, depreciation and amortization estimate or valuation potential. With solid growth opportunities for both coin-counting and entertainment divisions, coupled with the accelerating high-margin e-payment initiatives, Coinstar should achieve annual Ebitda growth of 10% to 20%. We believe the shares have appreciation potential to 46 to 51, using an Ebitda multiple of 7.5 to 8.5 times on the core business as well as an incremental 11 for the Redbox investment."

Shamrock

Mature business; Morningstar thinks it's fairly valued right now; management has taken on too many acquisitions; supermarkets are clamoring for more royalties. Good investment but won't make you rich.

Slim profit margins - that are akin to grocery stores where Coinstar's coint counting machines can be found - do not justify its current lofty valuation.