Six Flags (NYSE: FUN) director’s funds lift stake 29.6% in November share buys

What happened

Six Flags director Rehan Jaffer's funds bought 1,450,000 shares of Six Flags Entertainment Corporation (NYSE: FUN) from Nov. 6 to Nov. 10.

The purchases lifted the reported holding to 6,350,000 shares. The Form 4 lists three purchases at weighted average prices. On Nov. 6 the funds bought 700,000 shares at $10.00. On Nov. 9 they bought 350,000 at $10.86. On Nov. 10 they bought 400,000 at $10.32. The total came to about $14.93 million. The filing says each price averages several trades.

Funds owned and managed by H Partners Management, LLC directly own the shares. Jaffer is the firm's founder and managing member. The filing says he may be deemed to control how the shares are voted and sold.

Key numbers

Metric	Latest	Change	Source
Shares bought, Nov. 6 to Nov. 10	1,450,000 shares		SEC Form 4
Total value of purchases	about $14.93 million		SEC Form 4
Weighted average price range per share	$10.00 to $10.86		SEC Form 4
Shares beneficially owned after the purchases	6,350,000 shares		SEC Form 4
Holding versus before the Nov. 6 purchase	6,350,000 shares	from 4,900,000 shares, +29.6%	Calculated from SEC Form 4

Read more: Six Flags Entertainment (FUN) company research

Why it matters

OptimistFi has argued that Six Flags can turn its regional park scale into durable free cash flow. That depends on per-guest spending and merger synergies restoring operating margins fast enough to cover heavy post-merger liabilities.

A director's funds adding to their position on three separate dates fits that view, and OptimistFi reads the purchase as strengthening the case. The addition was large. OptimistFi calculates it equals 29.6% of the 4,900,000 shares held before the trade.

The ownership structure limits what the buying proves. The shares sit with funds that H Partners Management, LLC owns and manages. Jaffer disclaims beneficial ownership except to the extent of his pecuniary interest. The purchases appear on his Form 4 because he may be deemed to control how the shares are voted and sold. The buying may therefore not be a pure personal conviction signal.

Each of the three reported prices averages several trades. The filing gives the ranges: $9.55 to $10.35 on Nov. 6, $10.69 to $11.00 on Nov. 9 and, on Nov. 10, a span that begins at the same level as the Nov. 6 average and ends at $10.76.

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What's next

Six Flags' next quarterly report is the next test of the case. Rising per-guest spending and improving operating margins would support the buyer's bet. Flat or falling figures would weaken it.

More from OptimistFi

• FUN stock: research and coverage of Six Flags Entertainment
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