LEISURE LETTER (04/11/2014)




Monday, April 14

Atlantic City March revenues 


Monday, April 22

IGT FQ2 earnings:  , Passcode: IGT


Monday, April 24

PENN Q1 earnings:


Monday, April 24

HOT Q1 earnings:  , Passcode: 12049644



LVS - (The Morning Call) Tropicana Entertainment interested in LVS's Sands Bethlehem.  In the past, LVS had indicated it wants a high bid - around $1 billion.

TAKEAWAY:  Get it done. Not critical to the portfolio and we're sick of hearing about the transaction.


IGT - Installing Powerbucks (new WAP product) in CZR and BYD's casinos

TAKEAWAY:  In a secular declining demand environment, differentiation is key for operators.  Exclusivity won't last, however, as IGT needs to make a few power bucks.


PENN - Argosy Alton (IL) began closing one of its three gambling decks four days a week in early March.

TAKEAWAY:  More evidence of the tough environment for regional casinos



Lights dim for Japan's pachinko parlours FT 

Pachinko has been all but abandoned by younger Japanese.  Data from a Japanese research group show that the number of players has fallen by two-thirds over the past 20 years to 11m in 2013. 


Converting winning pachinko balls to cash is illegal but that violation is universally ignored by police.  Now, some pachinko groups are arguing that the looming acceptance of casinos means their industry should be brought out of the shadows too, gambling element included. Lawmakers who support them have formed a cross-party group to promote the idea – a development that has worried some in the casino lobby, who think it could increase public opposition to the pro-casino bill.

TAKEAWAY:  Pachinko lobbying would complicate Japan casino legislation 



Stomach illness that hit 83 people on Crown Princess may be linked to norovirus CNN

TAKEAWAY:  Media taking notice of the numerous norovirus cases.  Bad publicity for the cruise industry. 


Spain receives ~40% more cruise passengers thru February Hosteltur

In February, Spanish ports received 382 vessels, representing 62 more ships YoY or a 19.4% increase.  The number of cruise passengers who arrived in the Spanish ports surged 39.62% in the first two months of 2014 to 838,117 cruise passengers.

TAKEAWAY:  Spain recovering but capacity is rising as well



Hedgeye remains negative on consumer spending and believes in more inflation.  Following a great call on rising housing prices, the Hedgeye Macro/Financials team is turning decidedly less positive.

TAKEAWAY:  We’ve found housing prices to be the single most significant factor in driving gaming revenues over the past 20 years in virtually all gaming markets across the US.

Did the US Economy Just “Collapse”? "Worst Personal Spending Since 2009"?

This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”

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7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

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Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

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GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

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Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

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Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

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Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

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People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

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UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

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Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

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Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

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An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

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