As you know, from 2012 through January 2014, the analysts were consistently too conservative estimating anything involving gaming revenues, earnings and ebitda from the macau-centric companies and scurried around after each Q to raise their estimates. Since then, none of the 4 US companies' CEOs saw the big drop in VIP play coming, and now, "suddenly", the group think has gone from all will be well later in 2014 and in 2015 and longer to where, Henny Penny and all of her friends are afraid the sky really is falling now and Macau VIP will remain hammered as far as they can see.
That is almost the exactly the sentiment this "illustrious" group had back in mid summer 2013...right before the group and especially MPEL ripped the lungs out of the naysayers. Because it is instructive, I'll repeat that valuation can and one day will turn on a dime as it did back in July 2013 and again in June of this year when this stock jumped 20% from $31 to $37 in less than 10 days.
You noted last March or so that it would be good if the analysts and street thought of macau GGR growth as more of a 10% growth market and that such would be good for the stocks, even that now seems optimistic though, and it will be interesting to see what the CEOs have to say next month as they release the Sep Q and forward look updates. Ho's last comment was for more like mass growth rate of about half the ytd mid 30%s growth for macau overall from mid 2014 forward (incl 8 new properties under constr in macau coming on line), and that VIP overall would likely remain subdued for the near term, but that looking ahead to 2015, he anticipates that Macau will see a return to the former 15% cagr or so overall.
Meanwhile, hopefully the overarching din on vip is gonging with the China pols and they are thinking through the tax rev/employment aspects.
Re manila, Monday they said development was on final and they would open 4Q and see website update now, but no grand opening date set yet.
great comments Dave... look forward to any trip notes you might have
re Altira, VIP was down $100m yoy last Q... Ho talked about "repositioning" to cater to their large/impact VIP operators it so hopefully they make some progress on that aspect quickly. As you know, MPEL essentially let this business go ytd, seeing their VIP win drop at about twice the decay of Macau overall as they continue to focus on top level mass. Perhaps this Q will see them restore a bit of Altira's place in historical share of macau VIP.
I did not suggest that the "corruption crackdown" was to limit how "rich businessmen spend their [recreational] money." in fact, I emphasized that there is no "corruption" of substance flagged in Macau [other posts have amply discussed the govt clamp down on the 14 UnionPay card swipe operators on unauthorized machines operated out of car trunks after Shuli wrote at several articles hyping that UnionPay fraud was mutli-billions in macau -- LOL].
What I did frame was that the impact of the pol posturing on "corruption" is to cause China's elite wealthy to maintain a low profile with respect to gaming in Macau.
Your comments on the $20k/100k are interesting though... if you have any fact based premise for them, you should call Shuli Ren and Jim Detar (who parrots Shuli's every article half a day later LOL) with those objectively sourced inputs so she can write her first worthwhile piece on Macau.
re my comment: "fwiw, we are adding to MPEL and think WYNN is trading buy again down here."
Just blew out the small WYNN trade (4k shares) up just shy of $4/share since this morning not so much on the broad market reversal but the MA casino approval news that just hit the wire for WYNN... that won't even move the needle when done and ramping to mediocre ROIC for that property in 3 years, but it was sufficient to jolt the moronic shorts running on the Moron Stanley "news" from this morning into covering at $180. Hey, given the macau malaise ( not so much about ebitda, just VIP GGR "news" and corruption blithering), we'll take the easy pizza money. LOL
Contrast that with MPEL's Manila currently discounting nothing for 2014 and same for it and Studio City in 2015 based on relative ebitda multiples... some might imagine Packer and Ho intend to generate ROIC of more than none on those properties, d'ya think? Say at least half that seen in Macau once Manila is up the ramp? That is our baseline spreadsheet, with a significantly better outcome a year later (and before consider that MPEL plans expansion/Phase 2 development at both Manila and Studio City in the future.
Moron Stanley's comments are plain stupid and wrong; he and the research director editing his crud should be replaced. Your comments are lame too. No one "saw" the stupidity being exhibited by China's new leadership as they "crackdown" on corruption for political purposes having nothing whatsoever to do with macau except for how China's new elite wealthy like to do for expensive recreation. When I say no one, I mean no one -- not the leadership, not the company CEOs as late as May, not a single one of the "illustrious" analyst group following this sector, and no one on our staff or any other hedge fund of size or we would have all carried bigger hedges on our low basis core positions many of us are in for what is going to unfold over the next 3 years for MPEL and WYNN in particular.
As for "punishment", you must be new here and not have a street background... stocks go up and down and you play leveraged long, no leverage, hedged to reduced net longs with box offsets or pairs and or writing short dated calls for those who want to chase their own tails... anyone who bought to hold any of the gaming or any other high beta stocks over the last 9 months without the flexibility of hedging when indicated and or averaging down or having it be only with speculative capital should have someone else managing their money for them. Yet no one is "trapped" -- most guys posting here have owned the stock since well below $20 going back to early 2013 or prior. Our core position is at $17; our trading sleeve is now below $30. We like the risk reward down here; the eventual turnaround will be as fast as the 10 day rally from $31 to $37 in mid-June 2013... put that in your bong and smoke it.
And talk about ridiculous, IBD just hit the wires with a parroting of Shuli Ren's dumber than dumb comments. Incredible that barron's actually pays her to write such drivel.
this is great Dave... last night Morons Stanley shared their impressions of how things look in macau with one's head up one's #$%$, but now we'll get your impressions --- someone who actually knows the place and the business. I also hope you'll be able to discern wether the Studio city cap is underway -- if not already, any day now!
On room rates, using Vegas as a proxy, WYNN has always gotten high end clientele to pay up, and certainly MGM gets premium rack rates on Bellagio/Mandaly vs MGM's less expensive options because those who can afford to pay up for the nicer facilities and rooms/suites do so and or get comp'd out on the rooms (and meals and drinks and shows and single malts and ...) because their visits are very profitable for the houses. We think that WYNN will do just fine on their own in Cotai, but that MPEL will continue to attract the cream of the crop players as well... elite mass and premium mass clientele as it were.
The difference between that and those looking for cheaper rooms is already highly visible in the differential between MPEL's COD ADRs and those seen in the LVS venues...
A quick comment on the $40-45 you mentioned: we thought the stock was ahead of itself at $43 in mid Jan and sold out the trading chunk and box hedged half the core (owned at $17), taking off the hedge at the 50d ema at $38 or so then... Now we have all the temporary pol bs quelling the tours, but that likely will end soon. Additionally, Manila is going to open any day now as per their updated webpage for COD Manila, and Studio city is roaring ahead to the finish line. The current discount accorded these shares is ridiculous and yet terrific for those with spec capital to join on the bid side with MPEL's buyback activity down here.
Have fun and look forward to your visit notes if you have time to share them after a night at the table.
The COD manila Website is now updated:
"A New Era of Entertainment
City of Dreams Manila is unlike anything you have experienced before. Envision a world of exhilarating gaming spaces, world-class dining experiences, plush accommodations, and awesome play. Find your own place in this integrated urban resort. A new era of entertainment is about to begin in Manila."
Looks like the Japanese, Korean, and also the "low profile" Chinese whales will soon have a place to play away from the glare of China's political stare down noise -- without flying another 10 hours into and then another 10 hours back from Vegas for the weekend...then again, Vegas play faded in July after that much ballyhooed "Vegas GGR Recovery" lasted all of two months (May and June) while Steve flew in his China and "Latin" VIP players.
Meanwhile, MPEL is likely poaching more shares down here (if they liked it at $27 they should love it down another buck). We'd love to see them spend the entire $500m first tranche before year end, just in time to renew the authority and re-up the second chunk they will likely follow with... perhaps just ahead of the central planners ending the pol motivated "crruption crackdown" which has essentially nothing to do with macau business practices.
fwiw, we are adding to MPEL and think WYNN is trading buy again down here.
Multiple alias #$%$ suggests we sold out our core position... he can't read. Newbs who care might enjoy the facts here and can read this thread in chronological order, noting that I wrote the first thread in response to these idiots' bosses chasing the stock past $43 (where we bailed on the trading allocation and hedged out half the core (we own at $17) back to $38 before loading what is now our largest ever trading sleeve w ave at just below $30 courtesy these dopes shorting it down here for the likes of us, Pimco, MPEL's buback, and the cadre of investment professional adding to their holdings last Q between $31 and $37. And yes, we still own the core at $17. LOL
From my comments to bentley below:
"it is obvious to us that the easy money in MPEL and the group has already been made... As you know, we sold out MPEL at $16 then rebought at $12, and called it a screaming buy when it reset from $26 back to $21+ last summer, and made accurate calls on how pm lockdowns of 2013 gains would influence the tape. We've also been taking advantage of frothy trade for the last 13 months with trading sleeves as shared right here on the board for those who have been around (same on many names). We are still long the core, but hedged to only 50% net long, meaning we want to stay on while the frothy momo players chase it, but we don't want to find ourselves needing to sell out a large allocations when the pullback or sector snap happens, as it will like night follows day."
With that background, see my post dated Jul15 on this thread. Day follows night, but to the upside on the next big move...
MPEL's filing required by the large share repurchase trade last week documents that the buyback program discussed under "3." above is finally underway with vim and verve. So now we can move this from "wrong on" on up to the list of items we've been "right on" this year; whether the MPEL naysayers understand what is happening with MPEL near term and as the catalysts unfold doubling adj ebitda over the next couple of years (EVEN IF MACAU VIP AND GGR GROWTH DOES NOT BEGIN THIS MONTH OR NEXT -- LOL) matters not.
Of course this has nothing to do the facts... and judging by the inanity of the comment, it's yet another alias for mytek/idiotpumper/blaqnite putz ignore bin...
Anyone new here (everyone else knows this guy is an idiot) who might be interested in our views over time can read back to on many threads here to learn we hedged half of our core position (owned at $17) and sold out our then trading sleeve at $43 on the first run up to the double top above $45, explaining why we did that.
Here's an example posted up in mid July going back to my thread started on Jan 18th:
"Those who have not been around or forget how several here tried to dis me for calling the stock "frothy" above $45 and suggesting, on january 18 and 19 (the first of the double top highss -- see comments below ) that some who had nice gains along with us might want to consider hedging or selling some along with more reasons for that assessment, might want to read this thread top to bottom.
I'll also suggest that we are now precisely opposite that thinking on the risk reward matrix as I wrote a few weeks ago when we suggested the "bottom is in" around the retested $30 floor. Just as the sentiment was way too positive then, it is far too negative now... precisely the kind of opportunity we like to do our own risk/reward matrix on before going large. "
As we have qualified for months, we thought the left tail risk was to as low as $27 and added that it is certainly possible the stock could go below that if the global economy were to erode further, Putin rolls tanks or similar events unfold... but at $28 the stock is obviously discounted enough that MPEL has now documented buying in a good slug under the $500 buyback plan. We are long the core at $17, which, combined with our largest ever trading chunk just below $30, makes this our largest allocation. Another day week or few months of grinding along the bottom? LOL
same back at you
As noted, it is ridiculous that sector "analysts" and wannabe pseudo journalists offering their "insights" ( LOL) that the stocks will not recover until GGR turns up which can only happen after VIP returns to growth. That "logic tree" is simply stupid group think and as pointed out several times here over the years, this group of "analysts" (let alone weak sauce journalists covering the sector) are good only as contrarian indicators.
Have you read Birinyi's trading thesis? Group think work directly applicable here. The Huber interview in this week's barron's magazine article is equally on point. This is time to be acquiring the shares, not chasing them once they have been revalued without mind-numbing discount for the "sky is falling" chants rebroadcast many times over by the "confederacy of dunces" - consider reading the trials of Henny Penny, Lazlo and Ignatius Reilly -- all three of those titles are interesting metaphors for what is going on in the Macau names these days, except the smart money is already packing away the cast off shares, now incl MPEL on behalf of Packer and Ho's stewardship and ownership.
More simply put, a heavy weekend of VIP during GW will not solve for the recent Macau VIP and overarching GGR trendline; yet as night follows day, soon more appropriate discounting of individual company outcomes in macau will be part of the calculus and before too long a baseline/workable level of VIP will be re-established for Macau or the dealer shortage and construction crew shortages will be solved FOR Macau and the central planners without need for cage rattling. The govt there is already dealing with decaying growth and needs to avoid chasing capital development projects to more "friendly" and tax efficient venues. Gaming is the draw for macau and the pols distracted bs will soon end.
It reminds of the old joke, "Why did the moron hit himself over the head with a hammer?"
Answer: "Because it felt good when he stopped."
Looks like a couple of decent blacks traded today as well as yesterday... Maybe we will see the Manila schedule within a a few days now that they have made some serious strides on the $500m buyback ahead of that news.
That is Shuli's most bullish piece of the last 2 years. LOL
The analyst's comments she quotes reflect those of one who doesn't understand the business. Given the table shifts, which some of the bigger tours may know has crimped available private/operator floor tables as the companies are following MPEL's lead by moving VIP tables to premium mass and mass floors and also chasing mass/premium mass business generally as the Chinese VIP tours were playing in Vegas last Q (beginning in July, such play was on heavy fade in Vegas as noted prior), it seems apparent they would call the Macau venues to make sure that one house or another can handle them coming in with a big group.
As for timing, the article makes it quite apparent that neither Shuli Ren nor the subject analyst (Doosh Banc) grip that VIP tours have historically come for the latter part of the Golden Week festivities, that is, after the mass crowds have come and gone for the first several days. Hopefully they have whatever floor mods they wanted to get done at Altira as they reposition that 5 Star hotel for the "big VIP operators"... that would be great for GW VIP play.
For MPEL, it now seems too tight for them to have COD Manila open for GW as their development partner said was the schedule a few months ago... either that or an announcement is coming any moment now or they already have COD Manila booked for the GW slot without needing to book in a cadre of mass traffic. We'll soon find out.
Regarding WYNN, someone ought to send him the memo on Macau's VIP gaming remaining soft over recent weeks... and also let him in on the little secret that the 30%+ YOY baccurat play put up in Vegas during May and June (the source of the ill-founded belief that Vegas' GGR was somehow in permanent "recovery" mode) came to an abrupt stall in July as the Asian whales passed on flying in with their entourages on Steve's private jets -- leaving only Steve's "Latins" apparently... and back to single digit YOY table play. meanwhile, slot play in Vegas has been running negative and total GGR for the strip is about to go back to negative YTD YOY.
On second thought, F it... let him twirl his baton...
knightrider -- great post as is your history here...
As a point of clarification, MPEL may well have been buying in shares prior to this trade, but the size of this piece required disclosure under the HK listing agreement threshold referenced in the filing. We think this broadcast is unfortunate in that it puts otherwise unwitting shorts on notice that the company (including multibillionaires/co-chairmen Ho and Packer's companies owning a total of 67% of outstanding shares) is done letting their shares be stomped on down at these severely mispriced levels. As you allude to, we'd rather they buy in the entire $500m authorization down here prior to disclosing any buybacks, and then disclose the iterative second in what will likely be a series of up to some 8% of outstanding shares under the HK listing rules relevant to their ownership profile.
We, and our pals focused on this sector, love the message nonetheless... this is more than a heads up for everyone to take notice -- it is a 50 caliber shot fired straight through the forehead of unhedged shorts. MPEL's future will be brilliant; glad to see them assert their confidence prior to the opening of COD Manila as we noted last week that they were likely to do by taking in shares while idiots were willing to sell shares down here.
The Najarians and the "genius" writing press releases for them think it is big news, but it is not... The Najarians should stick to football commentating...
Today someone bought 4500 contracts at $1.20 apiece, meaning they are betting $540k that the stock rises to at least $32.20 (a 15%+ move) plus commissions for them to break even by Jan expiry. Although the option book has no calendar or other spread trade to show of late, this just isn't that much coin in the pm world... consider that some 6m shares at 28+ will trade today, meaning that pm are comfortable betting roughly $170m that their annual incentives on this stock outperforming the market in EOY. Further, this long position may be a simple hedge offset to a short trade on one of the other U.S-listed companies; none of them is in as enviable a position as is MPEL (% footprint growth; Manila expansion; best in class adj ebitda growth % t30m, and, despite all of that, by far the cheapest valuation on ebitda mulitples (i.e., the most mispriced temporarily) vs the group.
Given that Chinese whales want to play and the data indicates they have sharply curtailed playing in Vegas of late, don't be surprised if we begin to see some pickup in high stakes table play in macau any week now...
we just covered in at $1.90... I think it has a long way to go down to bkr $0, but we'll wait for the last lunge dead cat bounce to re-short. Sad for those who remember QUIK's stylin' former glory under the original exec team and early days.
The stock was at $8 when I said the story was effd and would soon be below $5 as serial quarterly disappointments unfolded...
The stock is Down to below $2 now... regarding your "See you at $10 short term" -- just how long is that "short6 term"? LOL