Great Call on AIG! What's Next?

• Report this Comment On August 18, 2009, at 10:32 AM, spokanimal wrote:

  Re Melco: There are roughly 3 dozen casinos in Macau but only 7 of any magnitude: Sands, Wynn, Starworld, Grand Lisboa, MGM, Venetian & City of Dreams. Three things to keep in mind with Macau:

  1. The big resorts will crowd out the small, "gambling halls" of yesteryear just as big LV strip resorts crowded out the smaller, downtown Vegas venues. The mass market shift to Cotai is approaching 30% of total Macau mass and Cotai effectively has only 2, big venues.

  2. With junket commission caps and impending competition from other countries (eg: 2 mega-resorts @ Singapore set to open), the VIP profit bleed will subside and the big AMA/melco-type VIP price war of 18 months ago will not recur.

  3. Since the 2+ billion pataca drop in Macau revenues that occured last September, the 3-month, moving average of Macau gaming revenues has steadily risen with no declines since last November. July saw the first YOY increase in such revenues against a solid July in 2008.

  A better bet than Melco is Las Vegas Sands. City of Dreams has taken nothing away from Venetian Macau... in fact, it's almost accretive to Cotai Strip business.

  And Melco doesn't have Marina Bay Sands, which could become the most profitable gaming resort on earth.

  Spokanimal

• Report this Comment On August 18, 2009, at 12:09 PM, gskinner75006 wrote:

  This company (AIG) and it's stock is a very good example of the combination of Las Vegas and Wall Street. Actually, more like "back alley" gambling. I have read a number of articles over the past few weeks about how very good companies are being punished and how some should possibly be avoided only because their dividend was too high or they might cut it a bit. As far as AIG goes, we have a company that for all intents and purposes, should no longer exist. The company as a "whole" is not even remotely profitable (unless you count the US tax payer, and there are not a lot of us that are profitable at this time). I wonder if those that placed this bet, played with real money. Too rich for my blood!

• Report this Comment On August 18, 2009, at 12:24 PM, plange01 wrote:

  next for aig continue to sell off its assets repay taxpayers $160 billion! and close!

• Report this Comment On August 18, 2009, at 1:03 PM, greenwave3 wrote:

  Cambridgecrusher made a great call on LVS at around $5, returning 250%. At this point, LVS looks really overbought as debt levels are excessive and point to a possible bankruptcy if they do not improve cash flow quickly.

• Report this Comment On August 20, 2009, at 5:16 PM, spokanimal wrote:

  Re: Greenwave3's comment...

  On the contrary, much of what is holding LVS back is fear of the balance sheet. Greenwave's comment is a perfect example of that. You can't open an analyst's report these days without them using the debt load to justify buying a truly overbought stock like Wynn Resorts instead. Analysts can't afford to recommend based on large amounts of heavily-leveraged potential... they'd rather pass on the 30-baggers in the bush in favor of a 3-bagger in the hand.

  Now that LVS has negotiated loan covenant relief that keeps them within the covenant ratios even at today's depressed EBITDA levels, the stage is set for further liquidity moves like a Hong Kong IPO or a joint venture with another firm for Cotai Strip sites 5 and 6. Clearly, there are dozens of liquidity options, each of which becomes more attracitve literally by the day.

  As the balance sheet issues fade and Marina Bay Sands approaches it's opening day, the fear discount will fade and the huge potential of it's operating venues will become more the focus.

  And, of course, the leverage could serve to greatly magnify the effect that a revenue surge would have on earnings per share, just as it served to endanger LVS's solvency prior to the Secondary stock offering last November. When considered in tandem with their permanent, $500 million cost cuts, the return on capital that we're likely to see in a year or 2 from now is immense.

  Spokanimal

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