Hedge Fund Taking Weight Watchers Private

Steve Kanaval |


Shares of Weight Watchers International, Inc. ($WTW) are up 17% in early trading on news that Artel Group, a large Luxembourg based hedge fund is looking to make a deal for all outstanding shares and take the company private. These are unconfirmed as yet, but let’s look at the facts of the case:

Today, after the 18% rally, the company value was worth $275 million. On January first of this year, the stock had a value of $1.3 billion, meaning it has lost 80% of its value to date in 2015, and since the death of its founder in April. But this is more of a story about a change in the way millennials lose weight with gadgets – the days of Weight Watchers and Jenny Craig have been taken out to pasture.

Logically, if you are Artel (which owns 52%) you are best salvaging the company and taking it private quietly - buying shares as they decline. But the news is out, so now need to pay more. I really don’t see this as good news for the majority stakeholders.

Taking it private is smart, because the costs of remaining public, along with the reporting responsibilities by management, weigh heavy on this $4 stock. It was different  in 2011, when shares were trading $85 per share and being public was a useful vehicle to pay the founder and management, but today you really just have the brand and declining cash flow. Just another casualty of disruptive technology. 

Weight Watchers and Jenny Craig are victims of Apple ($AAPL),

Fitbit Inc. ($FIT) and your smart phone have done a great deal of damage to these public companies that were cash cows at one point and widely held. However, the change in the way we exercise weighs more than the claim that it was a poor job by management running the company itself. Weight Watchers began in 1963, when founder Jean Nidetch invited friends into her home in New York City's Queens Borough once a week to talk about the best ways to shed excess pounds. Starting from that first group of friends, the company had grown to help millions of women and men worldwide who have joined Weight Watchers to lose weight and lead healthier lives.

I fully expect this company to be private in 2015, and you will be shedding excess dollars if you are an uninformed common shareholder, because they could buy all shares at $4.50 and disappear forever. The brand will still have value and reappear in other ways, but as a lowly common shareholder, you don’t benefit much from owning shares at these levels…so wave goodbye to Weight Watchers as they fade into the sunset.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


Symbol Name Price Change % Volume
AAPL Apple Inc. 172.43 -0.56 -0.32 40,176,091 Trade
FIT Fitbit Inc. Class A 5.47 0.06 1.11 3,732,768 Trade
WTW Weight Watchers International Inc 74.78 0.84 1.14 803,340 Trade


Emerging Growth

Margaux Resources Ltd.

Margaux Resources Ltd is a Calgary based resource company. The Company is focused on its Jersey Emeral Tungsten-Zinc property located in the southeast portion of British Columbia.

Private Markets


Voleo is a free download that allows you to form investment clubs with your friends, family, colleagues, classmates, teammates…basically anyone you know and trust. Invest and manage a stock portfolio…

The Green Organic Dutchman

The Green Organic Dutchman Ltd. ("TGOD") produces farm grown, organic cannabis for medical use. The company grows its high quality organic cannabis in small batches using craft growing, all natural…