- The first chart shows the YoY change in revenue (win) per slot per day and revenue per table per day. Revenue per slot has not had a positive quarter since Q1 2005. One could reasonably attribute the cause of the consistent decline to the large increase in the number of slots. In my opinion, that is certainly the explanation for the YoY decline in revenue per table as the number of tables has exploded too.
- However, the volume increase is only part of the answer in the slot trends. Look at the next chart that compares Macau slot metrics with Las Vegas. Despite a slot to table ratio of 30, almost 10x higher than Macau at 3, Las Vegas casinos generate revenue per slot per day at a level almost equivalent to that in Macau. As you may know, casinos in Las Vegas generate the lowest revenue per slot of any major market in the US. Slot supply there is not capped and Las Vegas is the most mature market. Compare the slot performance with the next chart. Clearly, this chart depicts a much different situation for table games. Despite the tremendous growth in number of Macau tables, revenue per table remains well above the Las Vegas level, indicating significant growth potential.
- What does this tell us about the Macau slot market? It may already have matured at only 14,000 slots, offering little growth to suppliers. Culturally, Asians may not adapt well to the slot product. A broader question is what does this mean for the rest of Asia? Singapore, Japan, Thailand, Taiwan, Malaysia, South Korea, Philippines, etc. are all potential growth markets for gaming. Culturally will gamers there align closer to China or the West? It might be time to redefine the international growth thesis for slot machine companies.
Icahn's long term track record speaks for itself. It's a great one. That said, I have not been bearish on him until recent months where I have taken the appropriate amount of heat for calling it like it is. Timing in this business is everything.
The bottom line remains. "Concentrated Activist" investing really only outperforms in bull markets where access to capital is readily available.
Of course, if you're levered long something in Brazil like Jim Cramer is, you can always "stop trading" as he so colorfully instructs his audience to do. Maybe take a siesta, of sorts?
Global Stagflation takes no prisoners. This short term decline in Brazilian stocks is severe.
(chart courtesy of stockcharts.com)
get free cartoon of the day!
Start receiving Hedgeye's Cartoon of the Day, an exclusive and humourous take on the market and the economy, delivered every morning to your inbox
By joining our email marketing list you agree to receive marketing emails from Hedgeye. You may unsubscribe at any time by clicking the unsubscribe link in one of the emails.
Gee, isn't that comforting commentary from bailout Ben today in Virginia... He is already on the public record stating that the Fed can drop money from helicopters, so this confirms the trend of his politization of the Federal Reserve.
It's a good thing that his easy money political policies will be gone at the end of his term (which incidentally run out at the end of 09' as well).
There is no downside support for a central bank that devalues their currency at every hint of local economic fragility (sound familiar?). With a recent technical breakdown and renewed fundamental frustrations, the March lows of sub 12,000 in the Nikkei Index are now in play.
It is global this time, indeed.
(chart courtesy of stockcharts.com)
the macro show
what smart investors watch to win
Hosted by Hedgeye CEO Keith McCullough at 9:00am ET, this special online broadcast offers smart investors and traders of all stripes the sharpest insights and clearest market analysis available on Wall Street.