The only thing I'm aware of is that one of the CNBC traders commented yesterday that he bought the stock and call options after he noticed unusually high call volume in the stock options. This implies that someone who knows something that others don't is taking a leveraged position betting on the stock rising.
What wasn't said is that it could also be someone with a large long position selling calls to help hedge their position against further losses. I note that the volatility premium for puts is higher than the calls, suggesting that may well be the case here,
At any rate, earnings (Maybe I should say the report on further losses) comes out next week. CZR has been consistently losing much more than the analysts predict. We'll see but I think this will burst the balloon in this little rally. I remain short.
It's hard to see how a former CEO from auto rental and auto parts companies would be a good fit for a large casino company. On the other hand, he's a CEO with a demonstrated history of financial shenanigans....never mind, that should be a good fit at Caesars.
So, Gary Loveman now joins other top executives who decided to leave their positions with CZR. He will remain as COB but is leaving as CEO. It sounds like a good score for Caesars that they landed the former CEO from a multibillion$ company like Hertz. But then again, maybe not. Frissora, the new CEO from Hertz, resigned there for personal reasons. It appears he was booted by activist investors including Carl Icahn. It was also sudden as he was replaced by an interim CEO (Hertz has since found a permanent CEO) so apparently someone wanted him out of there fast.
Hertz has also retracted its financial statements since 2011 which require expanded audits and at least one law firm is looking into suing them. See today's Bloomberg article about Caesars new CEO and/or google "Hertz financial health remains a mystery".
Caesars continues to look like a good short to me.
I don't think there are any las vegas casinos that are smoke free now. Silver City, a small casino on the north strip, tried it many years ago but they failed. Apparently gambling and smoking are two vices that go together.
I come up with $1.97 estimate for Q1 using the midpoint of guidance which is still a nice beat compared to analyst estimates of 1.85. I expect we'll see some analyst upgrades by tomorrow or whenever they get back to work after the snowstorm.
It appears that ST is going to start charging you interest on your borrowed shares. I would call them and ask the rate. No fees on my short shares at TdAmeritrade but last time I checked there were no more available. Last time I checked Interactive Brokers had shares available but they also charged 4% interest (annualized).
Junior bondholders sure don't like it as they are only offered a little more than 10% of the face amount. The bank lenders don't like it because they lose their claim against the parent company, CZR, and also need to accept a lower interest rate. That's 2 out of 3 groups who are opposed to the plan. Now a federal judge says that the transfer of assets out of CEOC appears to have violated federal law and put the bankruptcy proceedings on hold.
I think there's a good chance that the parent company will also have to file bankruptcy before this is over. What CZR did was similar to the spouse who is planning in advance for a divorce and tries to hide or downplay true asset values to shortchange the other spouse. I'll stay short CZR.
Interesting article recently listed some of those who Caesars owes money to and will be at the bottom of the food chain to ever get paid in the bankruptcy. They include:
$307,000 owed to Gordon Ramsay the celebrity chef.
$460,000 owed to Nobu, with a gourmet restaurant at Caesars (I'm guessing that Caesars hasn't been reimbursing them for comped dinners there)
$28.5 million owed to IGT, a slot machine manufacturer.
News like this will only drive more suppliers and vendors away. Reduced services will then drive customers away.
Down she goes and I remain short.
CZR is selling off today as investors are figuring out that the bankruptcy filing of their largest subsidiary won't get too far with a majority of only 1 of 3 lender groups agreeing to it. The most important and most senior group are the bank lenders who are owed about $5 billion by CEOC and why would they agree to it.... As it stands now, the parent corp, CZR guarantees all their debt. Under their plan, CZR wants to remove that guarantee and put them on substantially equal footing to the senior note holders. The banks would end up with mostly loans that pay generally lower interest rates, some equity in the new companies, and some cash. CZR tried to talk them into taking the offer and even offered to sweeten the pot by $150 mil, but the banks aren't biting.
The junior lenders will never go for the deal either as they only will get a very small portion of what they are owed, something like 14%. They have filed suit claiming that CZR's has plundered CEOC, removing some of its most valuable assets to another division without fair compensation.
While I think an agreement will eventually be reached, I don't see it happening without the equityholders losing more value in the process; which is why I remain short.
It appears to be a software glitch for Yahoo. I noticed today that lots of companies outside of the airlines have also had their earnings estimates disappear.
The 8K I referred to is dated January 7. I don't know why it came through the way it did in my previous post..
First lien banks don't like the deal and why would they? As it stands now, their debt is guaranteed by CZR, the parent corp. If the deal goes through they are not much better off than the 1st lien bondholders and the interest rate they earn is substantially reduced as well. The first lien bondholders will also gain equity in the new propco and opco. That will be equity that the current stockholders will lose. No way will the junior bondholders go for this deal as they are basically screwed.
CZR is trying their best to put lipstick on this deal but I don't think it will go anywhere without the banks going for it and even if it does go forward the current stockholders will be diluted away to scraps.
Two interesting points in their proposal: CZR is separating Caesars Palace in Las Vegas from the rest of the properties in the CEOC portfolio. Looks to me like they are preparing for the possibility of losing all the other properties but still want to hang onto their flagship property.
Also, they promise to provide estimated P&L statements at a future date for the propco and opco reorginization of CEOC. Why don't they provide them now to help the debtholders figure out if this can work. Maybe because CZR knows it won't?
Take the time to read through the 8K dated January #$%$ a long and convulated document prepared by CZR but, IMO, I think it's more of a wish list for CZR than something the lenders and bankruptcy court will agree to. I'm also short and could be wrong so caveat emptor.
Answer: When Caesars announces one.
They issued an 8K this morning saying that they reached a definitive agreement with a group of lenders. They then go on to say that the agreement is subject to it being approved by 2/3rds of those in the group and also will need to be approved by the bankruptcy court. In other words, they don't really have an agreement, just another proposal that could easily go nowhere. The market sees right through it and the stock is down again today.
No short is ever simple. This one is certainly more complicated than most but I also find it very interesting that bobdavis has made over 100 posts on CZR and none on any other stocks since his ID was established about 3 months ago. That strikes me more as someone with an agenda other than an investor.
CFO is taking an early retirement at age 61 and walking away from $1.2 million compensation package.
Chief Accounting Officer also recently left to "pursue other opportunities". Those two people know the numbers better than anyone else and decided to get out of dodge before this Titanic sinks. Why should stockholders hang around?
Correction: the lawsuit was actually filed late last month. CZR and the debtholders are sure keeping lots of attorneys busy. Fair value of zero remains unchanged, IMO.
He is trying to force the company to file bankruptcy before Dec 19. That way CZR mgmt won't have time to shuffle funds around and loot the company. He will come out way ahead on both his credit defaults and bonds. The stakes get higher...and the stock goes lower. Only 12.83 to go before it finds its true fair value.
Sentiment: Strong Sell