Shares of the Dallas-based club owner and operator fell 9.2% on April 7 following an attack by a short seller, but analysts polled by Bloomberg have 11 buy ratings, one hold and no sell recommendations on the company. ClubCorp is also now a member of the National Club Association, which actively lobbies for the private club industry.
ClubCorp Holdings Inc. shares declined after an attack by short seller Kerrisdale Capital Management, which says operator is worth less than a quarter of its current value, Bloomberg reported.
Participation in golf is shrinking, particularly among younger players, and operating golf clubs is a capital-intensive business, Kerrisdale said in a report released on Thursday. That’s left ClubCorp vulnerable, the firm said. The company, which had a market value of about $866 million as of Wednesday’s close, is the largest operator of private country clubs in the U.S., Bloomberg reported.
ClubCorp fell 9.2% to $12.05 as of 10:07 a.m. in New York on Thursday. Even before the tumble, the stock was down 27% this year. The Dallas-based company, which also runs sports and alumni clubs, has posted losses in two of the past three years, Bloomberg reported.
Most clubs aren’t run for profit, meaning customers often have relatively cheap alternatives, Kerrisdale said. The large proportion of mid-tier clubs in ClubCorp’s portfolio make it particularly vulnerable in a recession, when members could defect to public golf courses, according to the firm. A high debt load and state audits over refundable deposits also may lead to “a potentially fatal debt burden,” Kerrisdale said.
Short sellers like Kerrisdale bet that a stock will decline in value and rely on research to back up their case. The firm previously went after Sage Therapeutics Inc., saying in March that the biotechnology company’s leading drug candidate was likely to struggle. That stock fell 13% in the wake of that report, though it has rebounded in the past two weeks, Bloomberg reported.
Analysts surveyed by Bloomberg have 11 buy ratings, one hold and no sell recommendations on the company. ClubCorp was not available for comment to Bloomberg.
ClubCorp has become a member of the National Club Association, which actively lobbies for the private club industry.
“The national club industry is extremely dynamic and has a vital impact, not just on club members but on the communities in which they are located as well,” said Henry Wallmeyer, president and CEO of the National Club Association. “We are proud to be adding ClubCorp and its 200-plus clubs to our membership, increasing our commitment to protect and grow the industry.”
NCA works closely with legislators and regulators in Washington, D.C., and in the various states to promote the interests of private clubs and their members. In addition to advocating for private clubs, NCA also provides training and resources to help members govern their clubs more efficiently and effectively.
“We are excited to be joining the National Club Association,” said Eric Affeldt, president of ClubCorp. “NCA is an invaluable resource for both our company and our individual clubs. We are looking forward to working closely with NCA’s leadership to promote the interests of the entire private club community.”