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.
The dismal report, released Thursday, sent shares of
( TRMP) down 9% to $3.14 in afternoon trading. Trump is a stock I've
in the Bricks and Mortar portfolio.
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
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.
have the most hedge fund ownership (at 32%, 31%, 25% respectively, according to Goldman.)