The correlation between Steven Seagal's weight gain and Bally's stock price

Steven Seagal was on top of the world in the early 90's and Bally Total Fitness Holding Corp. (NYSE: BFT) was flying high in the early 2000's. This breakthrough analysis will demonstrate the relationship between Steven Seagal's weight gain to the decrease in Bally's stock price. Furthermore as Seagal helped himself to more cheeseburgers, his film career declined and Bally's management fell apart. How or why would anyone possibly argue this ridiculous thesis? The Stockmasters bring it all together in conclusion and pay homage to the reincarnated Buddhist Lama.

Just five years ago Bally Fitness was a stock worth holding but in just a few years it's been a rapid decline. These days Bally's is struggling to find a permanent CEO and is under the control of hedge funds - Pardus Capital Management and the Liberation Investment Group LLC with a combined total of 26% of Bally's stock. Bally Total Fitness is "the largest publicly-traded full-service commercial North American fitness center operator" complete with over 400 owned and franchised facilities. That hedge fund muscle managed to get former Bally's CEO Paul Toback to "step down" last year. In November Steven Rogers, a professor at Northwestern University's Kellogg School of Management was removed from Bally's board and said "I don't believe that a board should be comprised of people that are primarily looking out for a select few shareholders." The chart speaks for itself, it appears Bally's has past its prime, and is facing a fate similar to Steven Seagal:

Segal's movies now are released "Direct-to-DVD" which is the industry term for: Your movies suck and no one would pay $10 in a movie theatre to watch your just-add water re-cycled trash. Sure the Aikido star is still making money, so is Bally's (barely), but the glory days are in the past. Just as Bally's share price was decreasing, Steven's weight appeared to be increasing:

The 'Steven Seagal - Fat Factor' © by the Stockmasters intersects with Bally's share price decline at a pivotal point. It was at this time Steven's career took a questionable turn when he teamed up with DMX for Exit Wounds in 2001.

Just a year later following that dynamic Kung-Fu guy meets Rapper combo, Seagal hit the Wendy's drive-thru line hard and teamed up with Ja Rule in Half Past Dead. Let's review another photo from that movie just to prove how tough a doo-rag, prison rags, and 5' 8" side-kick rapper can make you look:

Wow, these guys mean business, even Michael Jackson would agree, Who's Bad? Well, Steven is for sure and his performance in this movie was not only Bad, it was downright awful. He was nominated, but did not win the Razzie Award for "Worst Actor" for his performance in Half Past Dead. He also received numerous Razzie nominations for his musical performance in Fire Down Below in 1997.

As for Ja Rule, he lost his hard-core edge when he did a Grease re-make video with Ashanti in 2003 for their duet on Mesmerize. Nothing says "hard-core" like a lettermen's sweater and balloons in the background - for real, though.

The questionable decision that lead Seagal to a B-List movie career is comparable to the hedge funds now running Bally Total Fitness Holding Corp. Bally's shares have been trading under $2 this week and less than 50 cents from its 52-week low. You would think perfect time to sell the company? Last year Pardus Captial Management bought 558,834 BFT shares at an average of $6.63* at a cost of $3.59M, this doesn't include the $6.4M they bought in 2005. The Liberation Investment Group LLC is holding 4.6M shares and in 2005 they paid an average of $6.15* a share but did better in 2006 when they only paid about $2.90* a share (* - Please note these calculations contain a variance of .10-20 cents and we are going on public information).
If you paid that much money for a company would you be willing to sell to only recover half of your losses?
Who knows, but since you can only own shares of Bally's, are you willing to risk that your money is going to be invested for your gain, or perhaps just free money for Bally's favorite hedge funds? Yes there is the potential for a bounce of Bally's shares, they are trading at $1.79 today. Their management could get the company under control, reduce debt, and turn the company around. Bottom line, the hedge funds in control of Bally's have a vested interest in the company, so they'll drain this puppy for all it's worth if they have to and gnaw on the bones once they're finished.

So what's next for Bally's, Seagal, and Ja Rule? It's tough to say but Seagal could save his dignity and career if Quentin Tarantino gave him a role. I know he could snap me in two in 5 seconds and I still love his early movies. There's just something about the guy you have to like and so if I've offended you Steven Seagal, I'm sorry. But with pictures on Google like these, you make it too easy to add a few words of text and 1-2-shabadoo:

As for Ja Rule and Bally's, they make the same category - Wouldn't touch it with a ten foot pole.

Article written by: Frank Lara Jr.
Article posted on: January 24th, 2007

Disclaimer: Frank does not own any BFT shares, nor does he own any long or short positions in BFT.