Where there's smoke, there's fire. Some investors think that cliche may hold true for Bruno's, which operates 257 supermarkets in the Southeast. "Bruno's stock is about to catch fire," says a New York money manager, who believes a big food chain is considering a bid for the Birmingham (Ala.) company. Recently, industry takeover chitchat has had the shares seesawing between 7 and 93/4.
On Sept. 12, the company strongly denied any such possibility, causing the stock to dip from 93/4 to 87/8. But by Sept. 13, the stock was again on the rise, trading at 9 on heavy volume.
What's really going on? Analysts are nearly unanimous in pooh-poohing takeover rumors. "I'm convinced by management's categorical denial, and I don't think the rumors are true," says Kay Norwood of Interstate/Johnson Lane. She has a "hold" recommendation on the stock. She thinks that, based on Bruno's lackluster fundamentals, the jump was unjustified.
But one big investor thinks the analysts are wrong--and insists Bruno's claim that nothing is going on means that "any takeover move will be hostile." This pro, who puts the buyout value of Bruno's at $20 a share, thinks the company eyeballing Bruno's wants to bolster its presence in the Southeast, where Bruno's supermarkets--including Piggly Wiggly, Food World, and Food Max--have a major presence. Sales totaled $2.8 billion in the year ending June 30, 1994, and are expected to hit $2.9 billion this year. Norwood figures Bruno's will earn 55 cents in the year ending June 30, 1995, up from 52 cents in 1994.