The WSJ’s ”Heard on the Street” column highlights Scotts Miracle-Gro (SMG), whose execs took a cold, hard look at their business and figured they could do with a lot more debt. "We felt like the moons were aligned, and so we went for it," says CFO Dave Evans. The co obtained $775m in additional debt and paid out $750m to its shareholders by distributing a special dividend and repurchasing a chunk of its shares. A number of public co’s are taking a leaf out of the playbook of private-equity firms and loading up on debt to improve returns for their shareholders. In doing so, they are taking on more risk and making big bets that they will stay profitable for years to come. The credit mkts have been hospitable to most fund-raising efforts, though there are signs that debt investors are becoming less accommodating and are starting to push corporate interest rates higher. During the past few months, Domino’s Pizza (DPZ), Health Mgmgt (HMA) and Dean Foods (DF) also unveiled plans to take on significantly more debt and distribute much of their cash to shareholders through dividends or buybacks. Proponents of such "do-it-yourself buyouts," also known as leveraged recapitalizations, say they make public co’s more efficient and may help increase their bottom lines in the long run.
Barron’s Online highlights Ivy Global Natural Resources Fund top holdins. Those include COP, VLO, RIO, DO, BTU, APD, GFI, NE, ACI and BHI.
“Inside Scoop” section reports that Urban Outfitters (URBN) Chmn and President Richard Hayne sold off close to 10% of his holdings in the co he co-founded, taking advantage of a pricey valuation to stitch up sizeable gains. From March 21 to 23, Hayne disposed of 4.5m shares for $114m on the open mkt. That trimmed Hayne's holdings to 39.3m shares, or a 23.9% stake. Mark LoPresti, of Thomson Financial, says, "This is the largest sale since 1993," when the co went public, in terms of dollar value for any year or for any individual. It is Hayne's 2nd-largest sale in terms of share count when taking into account four 2-for-1 stock splits since 1996. Ben Silverman, of InsiderScore.com, says there are a number of mitigating factors regarding Hayne's sales, such as, "he takes minimal amount of cash compensation and he isn't loaded up on options."