Editor's note: "Bricks and Mortar" is a mock portfolio created by Senior Writer Nicholas Yulico that is meant to help generate real estate and gaming-related stock ideas. In keeping with TSC's editorial policy, Yulico doesn't own or short individual stocks.
The Atlantic City casino market remains a mess, with gaming revenues falling 10% at the city's casinos in March from a year earlier.
Revenue fell 6.3% at Trump Marina, dropped 4.1% at Trump Taj Mahal and fell 2.2% at Trump Plaza. The results, however, weren't as severe as the overall market's 10% decline and the 13.4% revenue drop at the Borgata Hotel Casino, which is jointly owned by MGM Mirage (MGM - Get Report) and Boyd Gaming (BYD - Get Report) and is considered the best property in the market.For the past year, Atlantic City has been under intense competition to attract gambling players with nearby Pennsylvania, which legalized slots parlors. The implementation of a partial smoking ban in New Jersey is also hurting the market. I continue to recommend investors should avoid buying Trump shares, as the lack of near-term cash flow growth and hefty debt burdens leave little value for equity holders. The stock also will continue to remain volatile because of hedge fund trading in the name. According to Goldman Sachs research, about 18% of Trump shares are owned by hedge funds -- the fourth largest percentage among casino stocks. The stock also has a short interest amounting to 26% of the float. Progressive Gaming (PGIC), Multimedia Games (MGAM) and Bally Technologies (BYI - Get Report) have the most hedge fund ownership (at 32%, 31%, 25% respectively, according to Goldman.)
|Bricks and Mortar Portfolio
A Look at How Nicholas Yulico's Picks Have Performed
|Rating Date||Price at Rating||Rating||Current Price*||Total Return**||year end 07 price||2008 YTD Return|
|Brookfield Properties (BPO)||1/23/2007||28.67||Own||19.47||-32.1%||19.25||1.1%|
|Global Real Estate ETF (RWX)||1/23/2007||64.00||Own||53.72||-16.1%||56.95||-5.7%|
|Penn National (PENN)||2/6/2007||45.56||Own||42.64||-6.4%||59.55||-28.4%|
|Melco PBL (MPEL)||3/12/2007||15.46||Own||13.42||-13.2%||11.56||16.1%|
|Starwood Hotels (HOT)||7/12/2007||72.37||Own||49.35||-31.8%||44.03||12.1%|
|Home Depot (HD)||1/30/2008||29.71||Own||27.67||-6.9%||-6.9%|
|Average Total Portfolio Return, Unweighted, (including closed ratings)||16.8%||3.5%|
|Closed Ratings||Rating Date||Price at Rating||Rating||Closing Price***||Return**|
|Home Solutions of America (HSOA)||4/24/2007||4.98||Flag||1.06||78.7%|
|Standard Pacific (SPF)||10/26/2007||5.25||Flag||2.20||58.1%||3.35||34.3%|
|Close At Start of Portfolio||Current Value*|
|U.S. MSCI REIT Index||1140.36||896.39||-21.4%||870.64||3.0%|
|*(4/9/08 closing prices)
**For "flagged" stocks, a drop in price is tracked as a positive for the portfolio, and a rise in price is a negative.
***Hilton closed out of portfolio on 10/26/07 because Blackstone Group completed purchase of firm.
HSOA closed out of portfolio on 12/26/07 at day's closing price
SPF closed out of portfolio on 1/11/07 at day's closing price