Hedgeye CEO Keith McCullough is adding Boyd Gaming (BYD) to the short side of Investing Ideas. Below is a brief note.
Been waiting on a long list of high quality short selling opportunities... and this is one of them: Boyd Gaming (BYD).
Here's a great summary excerpt on why from Gaming, Lodging, and Leisure (GLL) analyst Todd Jordan's recent Institutional Research note on the name:
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BYD has rebounded sharply, up 125% off the bottom but still down 50% from the February high. The market quickly discounted the Covid-19 risks to the company’s business, and then some. BYD proved this week that it has the liquidity to survive a long time without revenues. Moreover, the catalyst of casino re-opening has helped the positive stock momentum. The first problem with re-opening is timing - already management's expectation of late May or early June openings are looking aggressive, particularly considering the Nevada Governor's comments yesterday. Nevada casinos won't be included until Phase 3 or 4 of re-opening. Sounds to us like 2H of June or July is more in the cards. The second problem is what will casino demand look like after they re-open? We’re focused on the post re-opening world and we’re not sure the risks are appropriately discounted in the stock at 9.4x consensus 2021 EV/EBITDA. |
Sell the bounce to lower-highs,
KM
