Prime Hospitality Corporation (PDQ – NYSE)

Position opened: First purchase on April 07 2003, total average cost of $5.25 USD

Position closed: Acquired by Blackstone, October 08 2004, total average proceeds of $12.25 USD

Hold period: 1.51 years

Rates of return: 133% (simple) and 75% (annualized)

Prime was purchased in Q2 of 2003 on the heels of a “bad” year. While revenues were down over prior years, 2002 was particularly bad because of a one time charge which caused Prime to declare a significant net loss. However, both long term debt and total liabilities were down 8%, cash flow was solid at over $1.00/share, and book value was over $15/share. Eventually, the Blackstone group noticed the same situation, and acquired Prime in 2004 at $12.25/share, for a nice 133% gain in less than 2 years.