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“Despite the soft revenue environment, Station Casinos reported revenue increases across all major departments and generated double-digit growth in Adjusted EBITDAM. This is our tenth consecutive quarter of gains in Adjusted EBITDAM. Our continued focus on efficiently managing our business has clearly improved our operating results."


-Marc Falcone, Executive Vice President, Chief Financial Officer and Treasurer. 




  • Disappointed in LV Locals revenue
    • Higher healthcare costs, federal govt issues impacted revenue environment
  • Graton Resort & Casino:  30% Asian target population in San Francisco; 13 restaurants, 9 casual dining choices
    • Pleased with inital opening of property and consumer response; smoothest of new Stations Casino openings
    • Fees: will now receive 24% of pre-tax income (year 1-4) and 27% of pre-tax income (year 5-7)
  • 10th consectuive growth of EBITDA growth
  • Overall, core LV market remain strong; housing market has shown improvements; construction on Strip is promising
  • Nevada: Ultimate Poker continues to be the leader.  Will release new features in next few months
  • Full-launch NJ i-gaming:  Nov 26
  • North Fork Rancheria: referendum will be on Nov 2014 ballot; Oct 22 compact was published in federal register; timing has become less certain
  • Adjusted EBITDAM leverage of 5.9x will improve as Graton opens
  • 3Q Capex:  $15.6MM; $66.8MM YTD;  $20-25MM addtional capex for balance of 2013

Q & A

  • Graton:  property opened for 1 week; will provide more financial details next quarter
    • Customers:  getting decent response from Asian community
  • Simliar trends within portfolio but more softness at lower-end properties 
  • Continue to delever the company
  • LV Locals:  will not comment on Oct trends; July/August was strong, September was weak; similar comments made by other operators
    • Promotional environment:  STN remains disciplined.  Periodic episodes of promotional activity by different operators.
  • $62MM Loan (rate 11 5/8%)
  • 2014 LV Locals:  group bookings are solid, visibility is limited 
  • i-gaming NV:  CZR launched 45 days ago; impact has been within range or slightly better than what they expected; CZR grew the market a little bit; industry still remain challenged with use of credit cards; still market leader
  • i-gaming NJ: $300MM to $1.2 BN - estimate of market size; will be dependent on ACH and wire payment options - will create limitations on market size; there will be an option to provide free play for players
  • North Fork:  waiting for validation of 500k signatures; no clarity until they get those
  • Will launch with full scale of games offerings in NJ
  • i-gaming NJ:  Exclusive contract agreement with Trump

[video] McGough: Why I Like $JCP, But Not $KSS

Brilliant: $JCP Burns $LULU

Takeaway: JCP is on offense, trying to find the right formula.

Hedgeye Retail Sector Head Brian McGough applauds JC Penney's campaign to burn Lululemon's fat-shaming.


From The Gloss 


"JC Penney Burned Lululemon's Snobby Fat-Shaming, And It's Brilliant"

  • "Lululemon‘s recent image problems are excellent news for other athletic brands, and JC Penney wants everyone to know that if Lululemon doesn’t want you in its pants, JC Penney is ready to hook you up."
  • “When it comes to yoga pants, we fit any shape and size,” JC Penney tweeted at right about the time Lululemon was making headlines for blaming the failure of its yoga pants on the size of its customers’ thighs.

Brilliant: $JCP Burns $LULU - jcplulu


Takeaway: Call this clever marketing campaign by JC Penney what it is: Brilliant. The company continues to show a level of irreverence in its marketing that sets it apart from other national retailers. We’re not saying that the marketing approach fully works. But simply that JCP is on offense trying to find the right formula. We like offense. 


For more information on Hedgeye research ping sales@hedgeye.com.

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Takeaway: We are removing Hologic Inc (HOLX) from our Investing Ideas list today.

We are removing Hologic Inc (HOLX) from our Investing Ideas list today.  




Hedgeye Healthcare Sector Head Tom Tobin says, "We overstayed our welcome on HOLX, but with the toolkit we have, we're likely to be back, just at a lower price from here."


Some Good Trends, But Mostly Just Confusing

  • We anticipated a tailwind from patient volumes in the quarter, share gains, and a stable headwind from interval testing sequentially from fiscal Q313. Share gains are clearly coming at a higher cost (lower pricing) than we anticipated.  Additionally, we have thought HPV testing would increase under the Cervical Cancer Screening Guidelines, which is either not happening, or being offset by price concessions to lab providers like DGX.  
  • In Breast Health, the positive commentary on 3D matches our analysis of new facilities with the technology, but again, pricing pressure in the legacy business is offsetting all of the gains. 
  • With problems in the base business worse than we expected, the opportunity from the ACA has become more important, and given problems with the roll-out, not a bet we're willing to take here.

Guidance & Valuation Interesting Lower

Walking through the FY14 guidance and accounting for share repurchases and de-leveraging, and a share price above $19 looks expensive at above 9X EV/EBITDA.  The new CEO may indeed be setting a reasonable and low bar to beat over the coming quarters, but we'd prefer not to stick around to find out.



[video] Keith's Macro Notebook 11/12: USD, ASIA, MBSBubble

Trapped In The Next Bubble

Takeaway: The next bubble to pop is the one no one can get out of.

The 2008 Oil Bubble... the 2011 Gold and Foreign Currency Bubbles... Housing Bubble... Food Bubble in 2012... stock market bubbles...


Just how many bubbles can Ben Bernanke foment under his watch?


The next one to pop is the one no one can get out of...Mortgage Backed Securities. And that’s why this Andrew Huszar's Wall Street Journal op-ed "Confessions of a Quantitative Easer" article is so timely.


Finally... Someone explaining the truth of Too-Big-To-Fail bond positions.


Trapped In The Next Bubble - Fed MBS


Editor's note: This is a brief excerpt from Hedgeye CEO Keith McCullough's morning research. For more information on how you can become a subscriber please click here

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