We’ve come off the Thanksgiving holiday with a flurry of developments of interest to investors.
Among them was the saddest: the death of Charlie Munger, whose accomplishments need no enumeration here.
Investing is enormously rich in its varied ways to succeed. Perhaps our favorite quote related to that is the lesson Warren Buffett attributed to Munger: “It is better to buy a good business at a fair price than a fair business at a good price.”
We look at gaming today and see a number of good businesses selling at fair, or maybe even bargain, prices. They include brick-and-mortar casino operators and digital operators, gaming technology companies and providers of various kinds of services.
They are to be judged not by 12-month stock price targets or how they did during Formula 1, not on the crowds they drew at G2E nor the room rate trends seen for next year.
The measures of success over time are whether their leaders have vision and a record of bringing that vision into reality, whether they generate long-term and continually growing rewards to shareholders.
Long-time readers of this space are familiar with our winners—Pinnacle Entertainment, Ameristar and Shuffle Master, among names of no longer independent companies; Eldorado-Caesars, Monarch Casino, Golden Entertainment and Full House Resorts among current names. Each of these companies returned at least several times their initial investment and a couple have generated much more.
We also are fans of two companies whose returns are less meteoric, but when combined with continually growing dividends and compounded over time, have proven to be big winners—the gaming REITs, Gaming & Leisure Properties and VICI Properties.
We have held these stocks not for a season or a year or for an event, but for years. We continue to hold them and, in a few cases, continue adding to our positions when they sell off.
The cumulative results over time have been greater than we could have imagined when we began. The lesson has been learned and proven: Buy companies with visionary leaders with vested interests in their futures and records of execution and stick with them, even if stock prices decline for a long period of time.
NEWS OF THE WEEK: THE MAVS, F1, KINDRED GOOD-BYE
- The Mavs. It took about 24 hours, but everyone now seems to believe the decision by Miriam Adleson to sell $2 billion in Las Vegas Sands stock to buy the Dallas Mavericks of the NBA has more than a love of roundball to motivate her.
Las Vegas Sands has been spending heavily to lobby for casinos in Texas and what better way than to become a home-towner by owning the local basketball team, especially since current Mavs owner, the super-popular Mark Cuban, will still run the team?
Throw in Tilman Fertitta’s ownership of the Houston Rockets and, suddenly, there’s a big local lobby to legalize gaming.
A friend and long-time private gaming investor, the late Norma Cohen of Dallas, once said Texas will never legalize casinos. “Why, Norma?” I asked. “Too many Baptists,” she said.
We’ll see whether such entrenched cultural conservatism carries the day, but pro-gamers are now lining up their best shots at it.
- Formula 1. Thank goodness, F1 is finally over and we can go back to talking about something else.
Before we do, however, it’s worth noting that this is just a reprieve.
Those foreigners with their funny-looking cars will be back again next year and maybe for a long time after that.
Early reports are that, despite all the stories of plunging hotel and ticket prices, the race was a big boon for Las Vegas Strip properties with lots of new visitors spending lots of money during one of the slowest weeks of the year.
Put another way, Las Vegas has achieved yet another event that further establishes its position as the world’s top entertainment city.
Our prediction: Next year’s race will be less hassle for locals and other visitors and even more profitable for the casinos.
- Kindred spirits away. The decision by Stockholm-listed Kindred to leave North America is just the latest step in the Americanization of American sports betting and iGaming.
The decision follows the departure of other foreigners such as PointsBet and the buy-out of William Hill by Caesars and may precede MGM Resorts buying Entain’s half of Bet MGM and Flutter maybe listing its stock in the U.S. or spinning off FanDuel.
The bigger picture is that the landscape of American sports betting and iGaming is clearing out as the big winners emerge, or perhaps more accurately, have emerged.
