Checking In At Prime Hospitality
No major street analyst is high on Prime Hospitality (PDQ ), which owns and franchises 240 hotels in the U.S. and the Virgin Islands, mainly AmeriSuites and Wellesley Inns & Suites. But Ben Segal, president of Winchester Capital Management, likes Prime for three reasons: The stock sells below its book value of 15.21 a share. It's poised to snap back with the economy. And it's takeover bait. The stock leaped from 4.58 in March to 8.74 on Oct. 15 -- still way below book.
Analysts are down on Prime, he says, because they go for earnings growth. "But," says Segal, who owns shares, "Prime is mainly an asset play" -- with low debt and ample cash to cover it. CEO Attilio Petrocelli, who has 3.5 million shares, continues to buy shares in the open market. Segal notes that few CEOs buy shares in the open market with their money, instead of through options. Spokesman Richard Hulnick wouldn't comment on the buyout speculation.
Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.
By Gene G. Marcial