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Vail Resorts Inc. Message Board

  • philiplaurenson@sbcglobal.net philiplaurenson Jan 31, 2009 9:55 AM Flag

    Downhill Skiing Part II

    Last summer I was somewhat reviled on this board when I recommended shorting MTN in the high thirties. Obviously the trade was highly profitable. So where are we now seeing that it's been to mid teens and back to mid twenties? I remain bearish.
    Anyone who thinks that the $1.33 (consensus estimate) for the coming reporting period (due in early March) is real is truly on a Rocky Mountain high. But arguably the market already knows this. What really bothers me is balance sheet deterioration.
    The current ratio slumped to about .7 at last reporting. Yes, the snow this year has been magnificent, but offering deals just to get bodies on the slopes is nothing more than trying to recover operating expenses. Cramped consumers aren't spending a lot of money in the high profit areas (restaurants and ta-ta retail).
    The stupid share buyback program (at cost higher than current market) has burned needed cash. Suspending corporate 401(k) contributions is practically irrelevant-few seasonal workers ever get vested. On the last conference call the so called analysts lofted nothing but softball Polyanna questions (must be afraid of losing their freebies).
    In my opinion the real scratch is real estate. Anyone who thinks there is a real market for million $ plus condos and homes at resorts has gone beyond a Rocky Mountain high to the hard stuff. Last quarter they reported over $56 million in real estate gains-well congrats, that's the real estate equivalent of climbing Mt. Everest in a bikini. Some of us suspect that a lot of those sales were booked on signed contracts-which is quite legal. However, if financing was not finally obtained and money didn't actually change hands, it would lead to the ugliest word in accounting i.e."restatement."
    The next reporting will be of great interest. I think anyone who owns this stock should sell it. If one is an aggressive gambler and willing to risk the news will be worse than expected-then you short it. But I sure as heck wouldn't buy it. Lower lows are not at all impossible.

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    • I too believe the ski industry (especially high end) is on the downturn for the next 2 years. This season has been disastrous for many, just search around the their websites, many are offering great deals which tells me things are not good. In addition, out here in the west, Mammoth laid off more than 100 people and I think there is more to come. The snow has been good, but this is the first time that I can think of where the economy and not the lack of snow has lead to a decrease in skier visits. Lets face it, if your not sure about your job or if you own a business that is not doing so well, would you go out and spend money on an expensive ski trip?
      Happy Trading everyone

    • I was thinking of investment ideas in a deepening recession and sking came to my mind. I enjoy skiing but it sure is discretionary income. Shorting MTN sounds like a good trade, I will read the Value Line opinion before placing a trade. And if they have real estate loses yet to be realized, it will be a profitable trade.

      Red

 
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