James Hodgins Great Canadian Gaming Corp GC-T DON'T BUY Aug 28, 2018

It has been a bit of a frustrating ride for him. The stock price has gone nowhere. The stock has put in a floor here and he would like to see it go up now. This will tend to hold up well during periods of weakness. It is a very well run company. Their financial metrics are strong. He is looking to hold this longer term.

Corona virus has caused a sell off. Ultimately this will be a short term blip to this stock. He likes the business and they have a strong competitive business. They are building big, new facilities which he thinks will be very positive. They have been buying back stock.

The money-laundering in Vancouver and the coronavirus have hurt the stock. For the latter, people aren't going to casinos. Revisit on any weakness. Sell on any strength. Or hold.

A new casino is opening in Pickering, ON and will keep Ajax, ON going. Revenues are up 15%, but the stock price is down. Go figure. Canadians love gambling and seeing live bands at casinos. The stock is selling 22x earnings after this pullback, so maybe it got ahead of itself.

Will GC go ahead with their Dutch auction at this low price? A Dutch auction is a buyback of shares in a block within a range. It's tax-inefficient for a shareholder who's not in an RRSP. Before the virus, itt was difficult for GC to get the amount of shares they wanted at a maximum of $46. But a clause says that if the S&P drops 10%, then the auction is off. But he believes GC will do the auction anyway. He likes this stock, a past pick. They will likely take advantage of this low stock price and change the price range. They have high cash flow and a reasonable valuation. Three to six months after this virus, GC will be in better shape because they bought back stock cheaper. Sure, there will be a slowdown in their gambling revenue, but not a cessation. It's hard to buy this with negative price momentum, but this is cheap. A long-term buy, sure.

He got stopped out of this. It's well-run, but the casinos are closed so there's no revenue coming in. GC carries a reasonable amount of debt. Also, casinos have high operating expenses, even during this lockdown. He wants to see stability in their debt, though. In recessions, gambling performs well, though.

It's being acquired now, so there's little juice to squeeze here. The market is assuming the deal will happen. He owns Evolution Gaming (Swedish) instead, which operates the software for online gaming (EVO is the ticker).

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research. Takeover offer. Pandemic hit hard. Solid assets, but re-opening slowed. Healthy balance sheet.

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research. Takeover offer. Pandemic hit hard. Solid assets, but re-opening slowed. Healthy balance sheet.