The Fed, led by Janet Yellen, concludes its two-day policy meeting today.
The Fed, led by Janet Yellen, concludes its two-day policy meeting today.
Takeaway: It gets worse in West Africa before it gets better, but the risk remains low for migration of ebola outside the current outbreak zone.
This note was originally published October 29, 2014 at 10:53 in Healthcare
Our call yesterday afternoon with Dr. Jeffery Shaman helped put the ongoing ebola outbreak into a realistic perspective. Below is the link to the materials, as well as our takeaways.
Materials: CLICK HERE
ABOUT JEFFREY SHAMAN, PhD
Dr. Shaman is an Associate Professor in the Department of Environmental Health Sciences at Colombia University, a junior faculty fellow of the Earth Institute, a faculty fellow of the Institute for Social and Economic Research and Policy, and a member of the Center for Environmental Health in Northern Manhattan. He is also affiliated with the International Research Institute for Climate and Society. Dr. Shaman received a BA in biology from the University of Pennsylvania, and an MA, M.Ph. and PhD in climate science from Columbia University. He was a NOAA post--doctoral fellow in climate and global change at Harvard University.
His research interests include: infectious disease, vector and pathogen ecology, health in the indoor and built environment, large--scale climate dynamics, the hydrologic cycle, and climate and disease forecast. Much of his present research focuses on developing model--inference systems for the forecast of infectious diseases, including influenza, West Nile virus and Ebola.
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Tickers: MGM, PEB, BX, NCLH
MGM & 2282:HK: Pansy comments – (GGRAsia, Macau Daily Times) Pansy Ho, co-chairperson of MGM China, said the Macau government must lessen restrictions on the hiring of migrant workers. Otherwise, the city’s new tourism and gaming developments will face staffing problems. Ho also believes that mainland China’s visa restrictions to Hong Kong have had an impact on the tourism flow to Macau too. Early this month, mainland China suspended visas for tour groups heading to Hong Kong, as a huge pro-democracy protest started to take shape in the HKSAR.
Takeaway: We couldn't agree more. That doesn't mean it will happen anytime soon
Macau Legend 577:HK – announced the Director of the Gaming Inspection and Coordination Bureau (the ‘‘DICJ’’) confirmed 35 additional gaming tables will be granted to Macau Legend. Macau Legend expects that the additional gaming tables will increase its gaming capacity and support the current development of Macau Fisherman’s Wharf.
Takeaway: CEO David Chow is very well connected politically so this shouldn't be a surprise.
PEB – announced an offering of 3.2 million shares plus shoe with approx net proceeds of $127 million.
Takeaway: While the use of proceeds was listed as "general corporate purposes" most investors believe the company will use the proceeds to purchase a full service hotel in Boston for $261 million.
BX – the world's largest private equity investor in real estate, is preparing to seek around $13 billion for its next flagship global real estate fund - Blackstone Real Estate Partners VIII, in line with its predecessor fund, according to people familiar with the matter. Its latest fund, Blackstone Real Estate Partners VII, which raised $13.4 billion in 2012, reported a net internal rate of return of 27 percent as of the end of September. Blackstone has sought to moderate expectations, telling potential investors that it will be hard for the new real estate fund to beat the high returns of Blackstone Real Estate Partners VII.
Takeaway: With approximately $40 billion in levered assets - that's a lot of cash chasing real estate assets. Could be good for hotel asset pricing. Also, given BX's recent involvement in various Las Vegas assets, could gaming assets be of increased interest?
NCL/GENTING CRUISES – (Seatrade Insider) The new Star Cruises' ship due be delivered in 2016 may be called the Genting World, and may look very similar to the Norwegian Breakaway class of ships, according to an ad run by Star Cruises in Asia. Genting Hong Kong, which owns and operates Star, continues to be a major shareholder in Norwegian Cruise Line.
Takeaway: The Genting overhang on NCL shares will not disappear but we think it is not a near-term risk.
Hurtigruten – (Reuters) Norwegian cruise line operator Hurtigruten has recommended a takeover offer from a group of investors led by several board members, valuing the firm at about 2.94 billion crowns ($444 million). Investors led by Chairman Trygve Hegnar and board member Petter Stordalen, a wealthy hotel tycoon, offered 7.00 crowns per share for Hurtigruten, which operates scenic cruises along the fjords of the Norwegian coast.
Takeaway: Scandinavia has done well for the cruise lines the last several years. The offer price is >50% share price premium.
Macau Public Works Director Immediate Retirement – (GGRAsia) Macau’s Land, Public Works and Transport Bureau director Jaime Carion will retire on November 1. Deputy director Chan Pou Ha will step in as acting director, it added. Macau’s Secretary for Transport and Public Works Lau Si Io gave assurances that the bureau had mechanisms in place to guarantee that the current projects would not face delays.
Takeaway: Despite assurances, it would seem more construction delays are now more likely given the permit delays and new Director transition.
Chinese Outbound Tourism – (China Daily) China is the fastest-growing market of outbound tourism in the world with an annual growth rate of 18.8%, according to Qunar.com. In 2013, the number of outbound Chinese tourists reached 98.2 million.
Takeaway: All tourism industries fighting for their fair share of this growing tourism segment.
Chanos & Kynikos Associates Betting Against Macau – (Reuters) Chanos is betting against Macau. He likened Macau to the overbuilding in Las Vegas and warned that Macau businesses were putting up more capital than ever for less in return.
Takeaway: We agree in general with Chanos on his negative Macau call although we are more positive long term on Macau and the ultimate ROIs on the new builds.
Atari Launches Social Casino– Classic console games developer Atari unveiled its social casino vertical Atari jackpots, in a move that sees the developer enter the social gambling market. The popular gaming brand will look to merge its iconic console/arcade content with casino slots and games. Atari has partnered with social games engine Flowplay, in order to transform its gaming content into casino led content for social and mobile channels. The Atari Jackpots social casino vertical will offer a collection of single and multiplayer games, including slots, blackjack, video poker and bingo. With the help of Flowplay, Atari has converted retro gaming titles such Asteroids, Missile Command, Tempest and Crystal Castles into social slots and games inventory.
Takeaway: All that is old is new again...
Las Vegas Strip Development – the project jointly owned by James Packard and Oaktree Capital Management announced the hiring of Rob Oseland, who was previously President and COO at SLS Las Vegas. Oseland is leaving to join former Wynn Las Vegas President Andrew Pascal in developing a new hotel-casino project on a 35-acre Strip parcel (across from Encore) on which the New Frontier once stood. Pascal is co-chairman of a company that includes Australian billionaire James Packer and investment firm Oaktree Capital Management.
Takeaway: Packard and Oaktree moving forward with their development.
SLS Las Vegas – following Rob Oseland's resignation, announced Scott Kreeger will join SLSLV. Kreeger was most recently chief operating officer of the since-closed Revel hotel-casino in Atlantic City. Before heading to Atlantic City, Kreeger spent the bulk of his gaming career in Las Vegas at MGM Mirage (now MGM Resorts International) and Station Casinos. Kreeger was the first general manager of Station Casinos’ Red Rock Resort, overseeing the property’s debut in 2006.
The Gramercy Park Hotel Listed For Sale – in an offering likely to test the limits of what investors are willing to pay to get into the business of operating one of the city’s best-known hostelries. Real estate investors Aby Rosen and Michael Fuchs hired brokerage firm Eastdil Secured to market the 186-room Gramercy Park Hotel. Messrs. Rosen, Fuchs and Schrager purchased the property, at 2 Lexington Ave., in 2003 and invested more than $200 million gut-renovating it. It reopened in 2006. By comparison, earlier this year, another popular boutique hotel, the Standard High Line, in the meatpacking district, sold for about $400 million, or $1.2 million per room.
Takeaway: Another hallmark hotel trade in the making. We look forward to the sale for another NYC comp. If the Gramercy Park Hotel traded at $1.2 million per key = ~$223 million sale price.
China real estate market slowing – (China Daily)
World Bank urges China to cut growth target: the World Bank said China can cut its economic growth target to 7% next year without hurting its labor market, as it urged Beijing to get rid of its growth objectives. The bank warned China against carrying its ambitious 2014 target of 7.5% growth into next year, saying that such a move would detract from the government's reform plans. It also predicted that property prices could fall further in coming months due to an over-supply of homes.
Singapore Property Values – Resale prices fell 0.7% in September from the preceding month, a reversal from August's revised 0.2% increase, according to the Singapore Residential Price Index.
Hedgeye Macro Team remains negative Europe, their bottom-up, qualitative analysis (Growth/Inflation/Policy framework) indicates that the Eurozone is setting up to enter the ugly Quad4 in Q4 (equating to growth decelerates and inflation decelerates) = Europe Slowing.
Takeaway: We're seeing bottoms up slowing in Europe cruise pricing in our monthly survey. Europe has been a tailwind for CCL and RCL but a negative pivot here looks increasingly likely. Following CCL's earnings release, we recently turned negative on those stocks based on the negative European thesis.
Hedgeye Macro Team remains negative on consumer spending and believes in muted inflation, a Quad4 set-up. Following a great call on rising housing prices, the Hedgeye Macro/Financials team is 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.
Takeaway: We recently added CHUY to our Best Ideas list as a short. We'll be hosting a call today @11AM EST to review our thesis and field questions.
Our short thesis focuses on the following:
Takeaway: Not a bad Q3 - luck helped - but management tone confirms our thesis that estimates need to come down
Our suspicions were correct on Q3 but that doesn't change the outlook
Please see our note: http://docs.hedgeye.com/HE_WYNN_Review_10.29.14.pdf
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