by Barry Unterbrink
Horse Racing FLA
Since our last update on our Horse Racing FLA’s index of gaming and racing stocks, the field has continued to gain strength. Our index started Jan. 1, 2015.
For the third quarter (July – September), our index gained +8.9%, adding to the 8% (Jan. – June) increase. The stock gains ranged from a loss of 7% for Eldorado Resorts (ERI), to a big gain of +32% for Isle of Capri Casino’s, Inc. (ISLE).
Eldorado proposed a $23 buyout of Isle of Capri in mid-September, the chief reason for the gain. ISLE shares have traded between $23.22 and $20.24 since then. The deal gives shareholders the option of receiving $23/share cash or 1.64 shares of ERI, so the deal has some moving parts.
In the quarter, 8 stocks were positive, and 4 were losers: Penn National Gaming (PENN), Caesar’s Entertainment (CZR) and Canterbury Park Holding (CPHC), along with ERI mentioned above.
The broad performance of the stock market, as measured by the Dow Jones Industrial Average, has risen just 2% by comparison for the three months.
Just three members of our index are “out of the money” and show losses year-to-date: Penn National, Caesar’s, and Boyd Gaming. That’s down from 6 with losses at our last report. This shows you that the rest outperformed greatly, and reminds us that this exercise has its risks of adverse selection if you pick and choose which stocks to include. The price swings can be very wide in these stocks, sometimes falling in half, then doubling in price. Particularly volatile this year are Churchill Downs (CHDN), and WYNN Resorts (WYNN).
At the beginning of 2016, we were weary of the same or similar performance in our index again this year vs. 2015’s gain of +23.7%. But now the 17% gain thus far this year could well make a strong run to the finish line in the final 48 days of 2016.
As promised last report to you in late August, we have created a sub-index of the 12 stocks in our original Racing and Gaming Index (1/1/15) to include just the companies who own and operate thoroughbred horse racing tracks*. There are 5 such companies, and they are listed and foot-noted below.
This 5 stock index has not started off well, falling 3.5% in the short 6 weeks since its inception (Oct. 1st start). There are many factors to consider in the two groups of stocks (non-racing entities vs. racing and gaming/entertainment entities).
We’ll continue to monitor both groups for our readers and investors alike.
In you have questions on our portfolio or for more details, please contact Barry at: email@example.com
Inception: 1/1/2015 thru 11/11/16#
Horse Racing FLA Racing and Gaming Index: +42.5%
Dow Jones Industrials: +8%
S&P 500 Index: +5%
# dividends/interest not included in the stocks or comparison indices.
12 stock index components: CHDN, LVS, BYD, PNK, MGM, PENN, WYNN, CZR, ISLE, CPHC, ERI, BJK
* Canterbury Park Holding Corp.’s only property is thoroughbred track Canterbury Park Racetrack and Card Casino in Shakopee, Minn.
Churchill Downs Inc. owns Churchill Downs in Louisville, Ky., Arlington Park in Arlington Heights, Ill., Fair Grounds in New Orleans, La., and Calder Casino & Race Course in Miami Gardens, Fla.
Penn National owns Penn National in Grantsville, Pa.; Mahoning Valley Race Course in Austintown, Pa.
Charles Town Racing and Slots in Charles Town, W. Va.; and Sam Houston Race Course in Houston, Tex.
El Dorado Resorts owns Presque Isle Downs in Erie, Pa.; and Mountaineer Resort and Race Track in Chester, W. Va.
Boyd Gaming owns Delta Downs and Evangeline Downs – both in Louisiana.