Twenty years ago, I saw Cramer touting propane dealer Blue Rhino. Blue Rhino’s business was selling new, pre-filled, tanks, rather than refilling tanks people already had. I could not remember exactly when that was, but I remember doing a moment’s research, and discovered that, a newly passed government safety reg required a new safety feature on propane tanks, and made it illegal to refill old tanks that did not have the safety feature. I figured, “ok, Joe goes to get his old tank refilled. dealer tells him he can’t refill the old tank, Joe needs to buy a new tank, and here is a new, pre-filled Blue Rhino tank, that solves his problem”. Only problem with that notion is it isn’t sustainable. Once all the old tanks have been replaced, in a year or two, why wouldn’t people go back to refilling the tank they have? Refilling from a bulk tank at the dealer must be cheaper than trucking zillions of little tanks around the country.
A bit of research last night: the new tank reg went into effect April 1, 2002. The reg was in place when Cramer was touting the company, so Cramer must have been running his mouth in spring/summer of 02.
The company’s stock set it’s high for the year in fiscal Q4, ending July 2002 at $14.57, up from a low of $3, before the safety reg went into effect. In fy 2003, the stock set it’s high for that year of $19.40, in the quarter ending January 03, falling off to $9.32 later.
By January of 04, quarterly earnings had fallen from $900k+ in January 03 to $111k in January of 04, as the regulation driven tank replacements ended. Ferrellgas bought Blue Rhino in February 04, for $17/share.
So, if people bought Cramer’s tout, they would have, eventually, about broken even, but it would have been a stomach churning ride.
Steve