Newspaper article St Louis Post-Dispatch (MO)

Battered Gambling Industry Seeks Compassion from Wall Street

Newspaper article St Louis Post-Dispatch (MO)

Battered Gambling Industry Seeks Compassion from Wall Street

Article excerpt

The gambling industry pleaded its case here last week to a crucial audience - money managers who guide the investment decisions of institutions like mutual funds and pension funds.

Wall Street has pummeled gaming stocks this year. Even many of the largest and most financially solid gambling companies have seen their share prices fall more than 25 percent.

Stocks kept falling last week even as 33 gambling companies' chief executives or chief financial officers boasted of cash flow and growth opportunities. They spoke at the Gulf Coast Gaming Conference sponsored by Oppenheimer & Co., a large investment company.

"This year the conference could be renamed the `Gulf Coast Battered Stocks Conference,' " said Daniel Copp, chief financial officer of Circus Circus Enterprises. Stock in Circus Circus, one of Las Vegas' biggest casino operators, hit a 52-week low the day Copp addressed the conference.

The segment's poor stock performance did not diminish interest, but it influenced the type of institutional investors who attended. Steven Eisenberg,the Oppenheimer gaming analyst who has organized similar conferences for 12 years, said this year's was the largest, with more than 200 institutions participating.

But some of the "momentum investors" from recent years were replaced, he said, by "institutions that look for low-multiple valuations." In other words, the bargain hunters were out in force.

That's not necessarily bad for the industry, Eisenberg said. "Value players tend to look at long-term potential and buy stocks when they're getting beaten up."

The intensity of interest was shown in a whirlwind, one-day tour of nine Gulf Coast casinos. Two busloads of money managers stood on an abandoned bridge in blazing Mississippi sun to view the construction of Boomtown's casino on the back bay of Biloxi.

Mississippi is often blamed for the decline in gambling industry stocks, as it fuels investors' concerns about saturation. The state has a policy of granting casino licenses to any qualified operator.

Many experts believe that the areas around Biloxi and Tunica already have too many floating casinos, and many more are under construction. Lady Luck Gaming has moved its casino out of Tunica. Last week President Riverboat Casinos, which owns the Admiral in St. Louis, said it will abandon Tunica and apply to Iowa for permission to relocate its boat to Carter Lake, which is near Omaha, Neb.

Some of the smaller, weaker casinos in Biloxi are expected to fail. …

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