In this excerpt from today’s Real-Time Alerts Live show, Hedgeye CEO Keith McCullough responds to a question about one stock in the energy sector.
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In today's edition of RTA Live, Hedgeye CEO Keith McCullough breaks down Real-Time Alerts positions as of 10:30AM on January 12th, and answers subscriber questions on Gold, S&P500, Biotech and more live on the air.
MPEL CEO Ho comments –
Takeaway: We think there is risk Studio City may only be allocated 150-250 tables.
NCLH – Kevin Sheehan has left NCL as CEO and is quickly replaced by Prestige CEO Frank Del Rio.
Takeaway: This was solely a personal decision by Sheehan with no influence from Apollo or the Prestige integration.
China Lodging Group (HTHT) – announced prelim Q4 2014 results
Takeaway: Weak REVPAR from low end segment in China
Philippines – A joint venture partner in two of Manila’s new private-sector casinos says the Philippines gaming industry is not being hit by the kind of slowdown seen in Macau. Andrew Tan, chairman and CEO Alliance Global Group Inc said, “In Macau, the slowdown is because the big chunk of their market is ultra-high rollers. We don’t have that segment of the market here. That ultra-high roller market is thinning out [in Macau] that’s why their growth has been slow last year but in the Philippines, we have a very different situation because our market here are more on the tourist side.”
Takeaway: Tan is justifying the rise in GGR last year in the Philippines
Unpaid leave – two casino operators have allegedly offered employees unpaid leave for as long as one year. According to a casino workers’ union affiliated with the Macau Federation of Trade Unions (FOAM), the proposal received an enthusiastic response from the workers, as it has been difficult for them to apply for leave in the past.
Takeaway: Political repercussions prevent layoffs
Southeastern Massachusetts casino license – 4 entrants
In addition, the Mashpee Wampanoag still intend to pursue a casino in Taunton.
They have until the 30th to make their non-refundable $400,000 deposit and must file site-specific plans by May 25.
Wyoming Lotto – CEO Clontz said the lottery has sold more than $6.5 million worth of tickets since it opened for business on Aug. 24. This coming Friday, the lottery plans to unveil its first state-based game. And while he didn't want to give too many details away early, Clontz said the game will be similar to the state lotto games held in Colorado and elsewhere. Clontz said revenues would increase significantly if the lottery was to begin selling scratch cards - they are by far the main game that players have been asking for.
Takeaway: The 2013 law prohibits the sale of instant games due to addiction concerns. But will that end at some point?
Wave Season – Cruise companies are opening 2015 with a raft of new TV ad campaigns seeking to take advantage of the upswing in consumer interest in cruise planning during Wave season. The ads range from new variations on established themes at Norwegian Cruise Line and Princess Cruises to a first-ever TV campaign in the U.S. for MSC Cruises. Another first will occur on Feb. 1 when Carnival Corp. unveils its commercial on TV’s most watched annual event, the NFL’s Super Bowl.
Takeaway: Wave marketing dollars are likely to be higher in 2015
Venice – The Veneto Region Administrative Tribunal has annulled an Italian Coast Guard decree on January 9 to ban cruise ships over 96,000gt from sailing through Venice’s Giudecca Channel and past St Mark’s Square to reach the city’s cruise terminal. The decision is not likely to have an immediate impact on large ship transits since Cruise Lines International Association members have been voluntarily complying with these restrictions while awaiting a solution to the transit debate, which all the interested parties hope to have reached with the proposed Contorta Sant'Angelo Channel project.
‘We are expecting no cruise ships over 96,000gt this year, resulting in a predicted loss of just under 300,000 passengers," Sandro Trevisano, president of Venice Passenger Terminal said. He added, ‘We are hoping this decision will induce the government to pass measures to support the return of cruise ships to Venice, however the Contorta Sant'Angelo Channel project would require 18 months for completion, putting our 2016 cruise business also at risk."
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: European pricing has been a tailwind for CCL and RCL but a negative pivot here looks increasingly likely in 2015.
Takeaway: LULU-Current mgmt incapable of $2.50 but one that will develop over next 12mnths puts $3.50-$4 in play. TIF-Holiday sales takeaway
LULU - Holiday Guidance Update
Takeaway: LULU came out this morning and raised guidance consistent with the high end of the range it had set before lowering expectations a few weeks back because of port delay issues. Despite the guide-down the stock has traded up 26% since the 3Q print and is up again following this release. We still like the name here - though the risk reward isn't what it was when the stock was trading in the 30s. Nonetheless, we're willing to give the benefit of the doubt to Co-Chairmen Casey/Mussafer with the hire of CFO Stuart Haselden last week. Is he a 'rockstar' CFO? Probably not. But we think he'll go a long way in building a finance culture at a company that is more devoid of one than any organization we have ever seen. The former management team was incapable of earnings anything over $2.50, in our opinion. But the one that should develop over the next year should put $3.50-$4.00 in play. In other words, the stock has traded up mostly on sentiment factors, but we think that the next leg will hinge upon LULU finally building out its global distribution platform, and growing like a great global growth company as opposed to a niche brand that has outgrown its Yoga pants.
TIF - Holiday Comp Sales Flat Y/Y
Our initial thought when we saw the number was that this was FX-related. While Japan looked terrible (-8%), Europe looked decent-enough at +4% (constant currency). The big problem area was the US, which comped down 1%. Maybe this is due in part to weakness in tourist spending in the US, but any way you slice it this is a rare guide down for a company linked to the high-end consumer.
W - Wayfair Reports Direct Retail gross sales increased 76%, overall company gross sales increased 51% year-over-year for long weekend including Thanksgiving and Cyber Monday
M - Bloomingdale’s to open NBA in-store pop-ups
FirstData: Holiday spend up 3.2%; Christmas Eve busiest spending day
Mark Katz Promoted to CFO of Burlington Stores
Kip Tindell Tapped as NRF Chairman
Gucci Designer Giannini Exits Early as New CEO Takes Control
Hockey gear maker Bauer Hockey to open retail stores