LEISURE LETTER (07/10/2014)

Tickers: GPI, IGT, WYNN


  • July 15-17 Pre-RCL 2Q earnings Hedgeye Cruise pricing survey


GTECH/IGT – (Reuters) GTECH owners have authorised management to make an all-cash 4-billion euro offer for IGT, La Repubblica said.  The offer should be presented soon, it said. The interest came to light in June.

Takeaway: We don't doubt the interest but the rumored offer price is too low and not realistic - trial balloon?


GPI – Gaming Partners International announced the resignation of CFO Michael Mann. GPI chairman Alain Thieffry was appointed interim CFO until a replacement for Mr. Mann is hired. GPI is a US-based casino equipment supplier and recently announced the acquisition of GemGroup, a US manufacturer of playing cards, casino chips and table layouts for US$19.75 million.

Takeaway: Mr. Mann's tenure was very short - he signed on to the roll less than a year ago, in September 2013. Our sources tell us that the GemGroup acquisition is not paying off as expected.


IGT (GGRAsia) reporting an increased interest by gaming operators in IGT's newest Asian themed games including San Xing Bao Xi, Azure Dragon and Great Zodiac Race.  On a side note, IGT recently unveiled games related to Tokidoki lifestyle brand - which it licensed earlier this year.

Takeaway: IGT is finally targeting Asian gaming markets with Asian themed games.  We saw the new games in Vegas a few weeks ago and it was clear that management is targeting this market where it's share is very low.


WYNN (GGRAsia) The revamping of two VIP rooms at hotel casino Wynn Macau has had a negative impact on the property's VIP overall market share. 

Takeaway: This has certainly contributed to lower share in Q2 for the property and probably helped boost Galaxy's share which has been trending higher.


New Jersey Gaming Expansion (PIX11) Venture capitalist and developer of Liberty National Golf Course (Jersey City), Paul Fireman, is in discussion with the State of New Jersey to build a 95 story casino-hotel-condo development on the bank of the Hudson River across from Liberty National Golf Course.

Takeaway: A property located just across the Hudson River from Manhattan would negatively impact the RWNY, Empire City at Yonkers, as well as Mohegan Sun and Foxwoods and of course Atlantic City.


Macau Cotai Water Jet – announced additional daily sailings effective July 16, 2014 with a 0630 sailing from HK's Macau Ferry Terminal to Macau's Taipa Ferry Terminal as well as a 1930 sailing from Macau Taipa to SkyPier at HKIA.

Takeaway: We have heard repeated commentary that the high speed ferries are often sold out in advance of sailing time.  As a result, the casual walk-up mass gambler will often need to wait 2-4 hours for ferry transit on a non-soldout ferry.


Missouri Smoking Measure – Gov. Jay Nixon signed a bill that could shield St. Charles' Ameristar Casino from any future countywide smoking ban. The measure, passed by the Legislature earlier this year, adds St. Charles to a list of cities exempt from county health rules if they set up their own municipal health departments. St. Charles Mayor Sally Faith, who sought the bill, worries that millions of dollars in city tax revenue from the casino would be reduced if smoking is prohibited and attendance dropped. Under current law, cities with at least 75,000 residents with their own health agencies are exempt from county rules "to enhance the public health." The bill adds St. Charles, which had 65,794 residents in the 2010 census to that category.

Takeaway: Good news for Ameristar St. Charles in a challenging, demand environment.


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

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