Bolling: Roll the Dice on Melco and Wynn
Editor's Note: Eric Bolling is new to TheStreet.com. A top Wall Street trader and an on-air television personality for the Fox Business Network, Bolling specializes in commodities, technology, resource trades and ETFs. He will provide regular picks in his column.
So I am on the set of the morning show "Money for Breakfast" on FOX Business and one of the guests was talking on his cell phone. He was saying that they were "recession-proof"....and that "people will still..... " do something or another -- his voice trailing off as he turned to go onto the set for a hit. It immediately brought to mind one of the oldest trading adages around: "You gotta love this stock because it is recession proof."
About 10 years ago, my mentor called me into his office to talk about some trades I was making. I have always been an extremely active commodities and equities trader, but at the time I was expanding into a wide range of sectors. Since he owned the clearinghouse where I cleared my trades, he saw all my activity. He is the Godfather to my son, so I have no problem with him seeing my trading activity.
This day, he brought me into his office and asked me why I was buying casino stocks. I said that these are 'recession proof' stocks. He looked me in the eye and I thought he was ready to say, "what the %@*!" Instead, he held the bewildered look for a beat or two and walked away. It didn't take anything more than that look to make my brain start to go into overdrive.
"Will people gamble as much even if their wallets are getting thinner or their job is in question? No you idiot, that's crazy."
I sold out all of my casino stocks.
But I love to trade these stocks and trade them when I see one that seems undervalued. I have owned
Melco PBL Entertainment
(MPEL)
for about two years (since the IPO) on the feeling that the great Stanley Ho's experience will aid the running of a Macau casino empire-in-the-building. In just two years, the Melco PBL Entertainment's Macau market share has jumped to more than 18% from 1%.
That is a success story in the making. I will own MPEL for the long run. This is a long-term hold and a member of my base portfolio. I am not in any other casino stock right now, but I think the space has been brutalized as the recession proofers bailed out on a recession sensitive sector. I really like
Wynn Resorts
(WYNN) - Get Report
. I have been in and out of Wynn for years. Thankfully, I am not in now, but intend to buy Wynn as soon as I get confirmation that 13,000 becomes support for the Dow Jones Industrial Average, not resistance.
Steve Wynn simply knows how to run a casino. The man started as a pit boss and worked his way into running a casino empire. The Wynn name is respected and Steve is a visionary. He will also be a major player in Macau as he owns one of the few remaining coveted licenses to operate a gambling establishment. The Macau property (land) alone is estimated to be worth in the hundreds of millions.
The casino sector has been taken out to the woodshed and it feels like the sector is way oversold so I am looking for a nice bounce.
I am a firm believer that the slowdown may be slowing down and we are soon going to be offered some great trading opportunities. One of my buys will be adding to my MPEL investment, and I will look to buy WYNN.
Since I am a titanium player's card holder at the Borgata in Atlantic City, I have a birds=eye view to another casino operator. Borgata is a joint venture between
Boyd Gaming
(BYD) - Get Report
and
MGM Mirage
(MGM) - Get Report
. Each own 50% of the Las Vegas-style casino. The only one worthy of a Vegas comparison in Atlantic City. I have owned Boyd Gaming in the past, but not at the moment. I like the way the Water Club -- Borgata's brand new, high end wing of suites and restaurants -- turned out. I am going to wait to see if that project brings in the high-rolling bettor they will need to justify the $650 million price tag. Since I spend more than an occasional weekend there, I will be sure to report back what I am seeing.
And I leave you with a piece of Bolling advice. Trade with your head, not over it. (Offspring of the widely used casino advice -- Bet with your head, not over it).
At time of publication, Bolling was long MPEL, although holdings can change at any time.
Eric Bolling is a host on the new Fox Business Network. Bolling was one of the developers and original panelists (nicknamed "The Admiral") on CNBC's "Fast Money."
Bolling is an active trader specializing in commodities, resource trades and ETFs.
Bolling is a member of several exchanges including The New York Mercantile Exchange (NMX), The Intercontinental Exchange (ICE) and The Commodity Exchange of New York.
After spending 5 years on the Board of Directors at the NYMEX, he became a strategic adviser to that Board of Directors where he assisted in bringing the company (NMX) public. He has been included in Trader Monthly Top 100 in 2005 and 2006. Bolling was the recipient of the Maybach Man of the Year Award in 2007 for his contribution of philanthropy and willingness to de-mystify investing to Main Street.
Bolling graduated from Rollins College in Winter Park, Florida and was awarded a fellowship to Duke University. Bolling was an accomplished baseball player. He was drafted by the Pittsburgh Pirates where he played before his career was cut short due to injuries. He honors his baseball past by sporting the NYMEX trader badge, R.B.I.