LEISURE LETTER (05/19/2014)

Tickers: BYD, H, VAC

EVENTS TO WATCH

Monday, May 19

  • Louisiana revenues out for April

Tuesday, May 20- Wednesday 21

  • East Coast Gaming Congress

Tuesday, May 20 -Thursday May 22

  • G2E Asia - The Venetian Macao

http://www.g2easia.com/Conference/#IGaming

COMPANY NEWS

INSIDER ACTIVITY:

BYD – William Boyd, Vice President, sold 12,000 shares of stock on Wednesday, May 14th at an average price of $11.02, for a total value of $132,240.00. Mr. Boyd now directly owns 33,960 shares in the company.

 

Macau Legend 1680.HK – Chief executive David Chow Kam-fai acquired 24.8 million shares in the company from April 30 to May 14 at an average of HK$5.79 each. The chief executive now owns 31.35% of the outstanding shares.

 

Melco Int’l Development 200.HK – Chief executive Lawrence Ho Yau-lung acquired 2.8 million shares from May 9 to 12 at an average of HK$23.59 each. The additional shares increased his holdings to 48.93%.

 

VAC – J Marriott, Jr. sold 25,220 shares on Tuesday, May 13 at an average price of $57.11. Following the transaction, the insider now directly owns 313,464 shares.

Takeaway:  Interesting that insiders of US listed companies are selling while insiders in HK-listed Macau gaming operators are buying shares. 

  

 

MHGC – Vector Group disclosed a 6.4% stake, strongly supports the potential sale or merger of the company, communicated to the company’s board that the company should be sold in a transaction to maximize stockholder value.

Takeaway:  More activism at this company.

 

H – announced the Company's Board of Directors authorized the repurchase of up to an additional $300 million of the Company's common stock. The Company currently has approximately $385 million remaining under its repurchase authorization.

Takeaway:  Recycling proceeds from non-core businesses into share repurchases, we like this trend at Hyatt.  

 

Silversea – drops Yalta, Sevastopol, Odessa from 4 Black Sea cruises (Seatrade Insider)

Citing the continued unrest in Ukraine, Silversea Cruises modified the itineraries of four Black Sea sailings that were scheduled to call at Yalta, Sevastopol or Odessa this year.  Silver Spirit's July 21 seven-day cruise will remain entirely a Black Sea itinerary with Turkey's Trabzon replacing Odessa, while three new nine-day voyages will focus on destinations in Greece and Turkey, and also retain the original Black Sea ports of Constanza and Nessebur. 

Takeaway:  More Black Sea calls canceled

INDUSTRY NEWS

Macau Junket Vetting – (Macau Business Daily) The Gaming Inspection and Coordination Bureau is being asked to review a licence issued to a junket operator that promotes VIP rooms. The request was sent by the International Union of Operating Engineers, a US trade union, and ‘provides detailed information on a junket owner who has been a business partner in separate ventures with Chan Seng Leong and Si Cheng Wan, two members of the 14K triad headed by Wan Kuok Koi (also known as ‘Broken Tooth Koi’).’  Chan Seng Leong and Si Cheng Wan previously had connections to Pun Chi Man, the owner of three gaming promoter licenses.  

Takeaway:  Union head Jeff Fiedler has been particularly punchy (or Pun Chi if you will) as of late when it comes to Macau.

 

UnionPay – (Macau Business) Two men have been arrested in Macau in a crackdown on the use of China UnionPay mobile swipe card devices.  Press reports indicated police officers stopped the men as they took a taxi from a casino on Cotai.  Officers said the pair were found with two of the mobile devices, HK$690,000 in cash and HK$500,000 worth of casino chips.  The men ages 25 and 30 are from Fujian province.   The arrests were the first since a Beijing-backed crackdown on the use of the payment devices was launched.

Takeaway: Poster story for the crackdown.

 

UnionPay – (Macau Business Daily) Secretary for Economy and Finance Francis Tam Pak Yuen dismissed the suggestion that there will be new rules on the use of China UnionPay cards in Macau come July.  However, Mr. Tam also stressed the Macau government will step up the rules if needed.  “We have always had measures ready [regarding the UnionPay cards] were there such a need,” said Mr Tam. “But at this moment we’ve not reached the step of issuing clear guidelines to stop some activities at a certain date.” The government is “closely monitoring” the situation and “will strengthen supervision if needed”, the secretary added. 

Takeaway: Maybe no new formal rules but casinos have already moved UnionPay retail outlets off the casino floors. 

 

Bird Flu - Health authorities in south China's Guangdong Province on Saturday reported two more human cases of H7N9 bird flu infection. A 37-year-old man, a native of Zhongshan City, was confirmed to have been infected with H7N9 virus on Friday, and the second case was reported in the city of Meizhou, where a 86-year-old man was confirmed to have contracted the virus. Both of the patients are in critical condition.

Takeaway:  Investors no longer react to bird flu scares.

 

Online Gaming – A national group of legislators from states where gambling is legal is recommending standards that states considering legalizing Internet gambling might adopt. The National Council of Legislators from Gaming States issued a framework for state legislatures to consider as they ponder legalizing Internet gambling, which is currently legal only in Nevada, New Jersey and Delaware. It says it does not take a position for or against Internet gambling.

Takeaway: Stay tuned, this debate feels like it's about to get hot...

MACRO

China to allow Provicial Municipal Funding(WSJ) China will allow 10 provinces and cities to sell bonds on their own credit later this year, introducing the country's first Western-style municipal bonds as it broadens financing channels for local governments.

Takeaway: Another sign the Chinese Central Government can no longer support all the required financial needs of the provincial governments? 

 

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.


SECTOR SPOTLIGHT | Live Q&A with Healthcare Analyst Tom Tobin Today at 2:30PM ET

Join us for this edition of Sector Spotlight with Healthcare analyst Tom Tobin and Healthcare Policy analyst Emily Evans.

read more

Ouchy!! Wall Street Consensus Hit By Epic Short Squeeze

In the latest example of what not to do with your portfolio, we have Wall Street consensus positioning...

read more

Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more