Hilton Worldwide will report Q3 2014 results tomorrow and we expect another beat and raise event (the treat).  However, we also very shortly expect a Halloween surprise – a secondary equity offering of 90 million shares by Blackstone (the trick). We reiterate our positive view on Hilton and the lodging sector but remind investors to be sensitive to event timing.


Please see our note

FLASHBACK: Hedgeye's Keith McCullough Warns About the Return of Deflation In This 2-Minute Video

Takeaway: #Quad4 is one of the most important macro trends we have identified for the quarter.

FLASHBACK: Hedgeye's Keith McCullough Warns About the Return of Deflation In This 2-Minute Video - 45


Before formally introducing #Quad4 as one of our top Q4 macro themes, Hedgeye CEO Keith McCullough explained during an institutional call in September why we were likely heading into Quadrant 4 of his model. That’s when both growth and inflation slow.


For the record, during this call McCullough also advised getting long Utilities (XLU) which is up well over 6% since this video first aired, versus the S&P 500 which is down -1%.

#Quad4 is one of Hedgeye's Q4 2014 Macro Themes. In other words, it's one of the most important macro trends our macro team has identified for the quarter.

  • · #Quad4: Our models are forecasting a continued slowing in the pace of domestic economic growth, as well as a further deceleration in inflation here in Q4. The confluence of these two events is likely to perpetuate a rise in volatility across asset classes as broad-based expectations for a robust economic recovery and tighter monetary policy are met with bearish data that is counter to the consensus narrative.

Will There Be An October Surprise? Call with renowned pollster Scott Rasmussen

Will There Be An October Surprise?  Call with renowned pollster Scott Rasmussen - HE M octobersurprise


We will be hosting a conference call on Monday, November 3rd at 11:00am EDT with renowned pollster Scott Rasmussen to discuss the upcoming midterm elections.  


Mr. Rasmussen will provide a 30 minute presentation on potential election outcomes followed by an open Q&A moderated by Hedgeye Director of Research Daryl Jones.


Mr. Rasmussen was referred to by the Washington Post as "a driving force in American politics" and been called "America's insurgent pollster". He has widely been considered one of the more accurate pollsters in the nation and the one who is most in touch with subtle opinion shifts in the electorate.




  • What are the probable outcomes nationwide for both the Senate and House of Representatives?
  • Which races are most likely to end in surprise?
  • What are the implications of this election for politics, economics, and policy?
  • Post the results, what are the implications for the President and both parties in various outcome scenarios?



  • Toll Free Number:
  • Direct Dial Number:
  • Conference Code: 399212#
  • Materials: CLICK HERE(slides will be available

    approximately one hour prior to the start of the call)

Ping for more information.



Founder and president of Rasmussen Reports, Scott Rasmussen is a political analyst, New York Times bestselling author, public speaker and independent public opinion pollster. 


In 2012, Rasmussen became a New York Times bestselling author with his book The People's Money. His earlier books include Mad as Hell: How the Tea Party Movement is Fundamentally Remaking Our Two-Party System and In Search of Self-Governance.


Rasmussen and his firm have developed a reputation for delivering reliable, newsworthy and actionable public opinion data.'s Mickey Kaus declared in 2009, "If you have a choice between Rasmussen and, say, the prestigious N.Y. Times, go with Rasmussen." The Washington Examiner's Michael Barone calls him "one of America's most innovative pollsters." Pat Caddell and Doug Schoen, pollsters for Presidents Jimmy Carter and Bill Clinton, say that Scott has an "unchallenged record for both integrity and accuracy."


In 2008, Rasmussen projected then-Senator Barack Obama would win the presidential election by a 52% to 46% margin. Obama won 53% to 46%. In 2004, Rasmussen was within half a percentage point of the actual vote totals earned by both President Bush and Senator Kerry.


investing ideas

Risk Managed Long Term Investing for Pros

Hedgeye CEO Keith McCullough handpicks the “best of the best” long and short ideas delivered to him by our team of over 30 research analysts across myriad sectors.

Cartoon of the Day: A Closer Look Behind Today's GDP Report

Takeaway: A closer look behind today's GDP number reveals a picture not nearly as pretty as the headline suggests.

For more Hedgeye macro perspective on today's GDP report click here.


Cartoon of the Day: A Closer Look Behind Today's GDP Report - GDP cartoon for 10.30.2014


Takeaway: Perception of Vegas recovery remains much stronger than the data indicates. Another weak quarter from MGM

How to convinced the Street that normal is not normal - low hold blamed for tough quarter (19.8% is pretty close to the midpoint of 18-22% normal range unless my calculator is broken)




  • Very robust mass market growth at MGM China
  • Lower margins at Strip due to investments made to Delano, lower table hold, and increases in certain expenses
  • MGM Cotai: on schedule to open in Fall 2016; 
  • Delano completed at end of September:  has exceeded expectations
  • Monte Carlo/NYNY:  construction work disrupted performance
  • MGM National Harbor opening Fall 2016
  • MA: Confident on NO vote on Proposition 3
  • Japan IR debate:  remains active
  • Strip REVPAR:  6% exceeded guidance of 5%
  • Grew convention mix by 3% points; in 4Q, will increase convention mix by 2% points, will bring FY convention mix to all-time high of 17%.
  • 4Q REVPAR guidance: 5%
  • STRIP EBITDA:  -$40m due to lower table hold, higher employee benefits, and marketing costs associated with Delano
  • CityCenter:  improved profitability at VDara
  • Aria:  lower EBITDA due to lower table hold %
  • Vdara:  96% OCCU, 12% in REVPAR
  • Crystals:  another successful quarter
  • $545m cash at MGM China
  • MGM $1.2 bn: available liquidity; MGM China $1.4 bn available liquidity
  • $404m cash CityCenter ($157m in restricted cash); total debt: $1.5bn
  • 3Q:  $103m capex (wholly-owned); $46 (National Harbor/MA), $98 MGM China ($17 at MGM Macau, $81m at MGM Cotai)
  • MGM China
    • Slot handle: 5%; revs: -7% due to lower hold
    • Mass: drove 75% of profits
    • Will continue to allocate tables to mass floor
  • Las Vegas consumers:  feeling better, lower gas prices; +4% visitation YTD
  • Mandalay:  will increase conv space in 2015 by 300k sq ft


Q & A

  • -$40m breakout excluding low table hold impact:  70% related to changes in employee benefit side; 30% impact from Delano/Monte Carlo
  • Flow through has been more volatile.
  • MGM China margins:
    • Controlling costs in tough revenue environment
    • Mass business - pretty steady and consistent
  • Convention 1Q 2015:  pace continues to get better; 
  • 2015 convention mix should be higher than 17%; low single digit growth in convention business 
  • Goal is to increase REVPAR in every quarter in 2015.
  • MGM China VIP/Mass margin pressures?
    • Some operators have been discounting. Does not motivate customers. MGM China does not see need to discount.
    • Premium mass outperforming in the Peninsula
    • Highest EBITDA/per room in the industry
  • Low Bellagio 3Q REVPAR:  have started to push rates.  Convention rates were lower than what they could have been. 
  • 3Q Low table hold:  Mirage - largest decline  on a YoY basis; MGM Grand (held well last year, held more normal this year); Bellagio table hold (being a little better this year at normal levels)
  • REVPAR:  luxury/core pretty consistent; revenue spend up 3-5% on luxury and core properties; consumers getting more healthy
  • REVPOR was 6% in 3Q, strong performance
  • 2015:  convention business will be stronger in the city than 2014, will build share and benefit core properties 
  • 4Q:  having a great convention quarter; mix up 3% points;  but tough comps in 4Q 2013.  Shake Shake coming in mid-December.
  • F&B Vegas EBITDA:  +9% in 3Q, driven by catering business driven by strong convention calendar; 
  • Excited about Genting project:  will drive new customers to Las Vegas


Takeaway: We continue to like NCLH and think Prestige synergies are likely to contribute to continued estimate beats

Positive commentary regarding 2015 $25m Prestige synergy target which we think is too conservative. Guidance for 4Q yields is above Street expectations. 






  • 25th consecutive quarter of trailing EBITDA (TTM) growth; 23% CAGR
  • Anticipate Prestige closing in mid-November; 4Q call will be first with integrated company
  • Norwegian Escape:  offering 7-day cruises beginning in Nov 2015
  • Have set Ebola protocols across fleet; have seen impact on the margin over past several weeks however, booking have returned back to pre-Ebola levels.
  • FX impacted 3Q by 2 cents; going forward impact will be similar in 4Q
  • Made incremental investments in marketing in 3Q
  • 4Q
    • Drydock earlier than expected 
    • Work underway for scrubber installations; will have a number of staterooms out of service
  • 2015 capacity: 59% in Caribbean, 17% in Europe, 5% Hawaii, 3% Bermuda
  • 2015 Caribbean capacity: slightly down for the year;
  • 1Q 2015: tougher comps (3.8% yield in 1Q 2014, two ship charters that did significantly well (Sochi/Bud Light Hotel)); volume will be consistent with 1Q 2014
  • Investor Day in early February and will provide 2015 commentary
  • In 2016 and afterwards, will report on consolidated basis

Q & A

  • 2015:  significantly more loaded on Getaway, Epic, and Breakaway in 1Q YoY.  Well ahead on every quarter on load in the Caribbean.  1Q pricing is a little bit tough 
  • <1% industry capacity change in Caribbean in 1Q from 53% to 52.2% 
  • 1Q yield: could finish +1% yield (but would be difficult to achieve that given tough comps)
  • Prestige synergy of $25m:  is already in the bag; more opportunities ahead - port contracts, shore excursions, fuel
  • Margin opportunity with Prestige?  if economic picture gets a little better, could be another 500bps improvement
  • 2015 Prestige:  booked solidly; revenues up significantly, feeling some pressure in 1Q, same as Norwegian. 
  • Revenue opportunities with Pride of America and The Haven concept
  • Shift of drydock impact on 4Q? $2-3m benefit 
  • 1Q 2013 charter contribution: a little over a 1% of growth
  • Commissions/transportation/other line run rate:  15.5-16%; renegotiated port contracts, renegotiated credit card costs, more casino initiatives; more targeted incentive programs.
  • MSC aggressive 'free-ship' offer:  great brand in Europe
  • Europe:  pricing doing well in 2014 but because of carnage in 2012/2013; sees good pricing continuing.
  • Asia:  will be more interested in 2016

the macro show

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