Well, it wasn’t hard to make money today but I am most proud of the fact that I picked one of the only stocks in the entire market (even in its own group) to go down in LVS.
I’ve looked hard at LVS today and boy is it ugly:
- A p/e of 165 vs. 26 for BYD, 20 for HET and 27 for MGMGrowth that is 1/3 of HET or MGM.
- Lower revenues than all 3 but with a market cap that is much higher.
- 80+% of the stock owned by one guy (Sheldon Adelson) – you pay up to make him rich. What really makes me mad is that the company raised $750M in its IPO last year and then paid out $125M in dividends. That works out to about a .50 rebate to everyone who shelled out $50 in the IPO but $130M for Shelly, who paid nothing! You should be able to call him by his first name after he screws you! He even paid out another $21M in the first quarter this year while the company only netted $7M in profit!!!
- EPS this year will be less than 1/2 of last year when the stock IPO’d at 50 (and sold off to $33 in 5 months).
- Long Term Debt is $1.5Bn, and the company has chewed through $700M in cash this year without paying down a dime of it.
- They also came up with “Deferred Long Term Liability Charges” of $178M this year.
- Accounts Payable are up $140M while A/R is down $40M. This is what you do in a business when you are scrambling for cash.
- They lost $203M from “Investing Activities” last quarter (what do you expect, they are gamblers).
- The assets (land/casinos) of the company are booked at $1.7Bn but if real estate turns or the casino doesn’t perform – well, see Trump’s bankruptcy filings for that scenario…
The only thing stopping me from calling this the short of the year is that there is very little public float. Shelly owns 80% of the stock and institutions are on the hook for another 9%. Of the remaining 10M shares, 5.4M shares are already shorted. This stock can be manipulated pretty easily (not that anyone would do something so unseemly) but insiders have been selling like crazy so the institutions may not be far behind.
I am holding onto my puts and considering taking a longer put position on this one. If someone more famous than me looks into this, I think it will all hit the fan rather hard!
