Opinions
Michael Simpson, CFA
Gateway Casinos Income Fund
GCI.UN-T
BUY ON WEAKNESS
Feb 23, 2007
Casinos, primarily in B.C. and Alberta. Trading in line with its US comparables. Expanding their flagship in Burnaby with a hotel that adds an element of risk. Would prefer it around $15.
$18.800
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Longer term, the casino business, particularily in B.C. is a very good model. Basically all the capital expenditures are funded by the provincial government and in turn they get a fairly big chunk of the operating profits. Long term, it is very well positioned. Shorter term, it will continue to face some challenges in competition. Not a bad entry point.
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Has had a pretty dramatic correction. Stumbled in the 1st quarter and a little bit in the 2nd because the competitive environment in Vancouver has become very tough. The growth is going to take some time. At a level where most of the downside is reflected in the price. Long term, really likes the stock as it is well suited to the trust model.
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