As I swig on Kool Aid, I've beginning a position in Las Vegas Sands (LVS). I was once worried about bankruptcy here but if MGM Grand (MGM) is considered safe from bankruptcy, LVS is in substantially better shape. We live in a too big to fail society - not just in banks [Sep 3, 2009: Las Vegas Sands - Too Big to Fail?] [Apr 22, 2009: Wynn Resorts, Las Vegas Sands Amend Credit Terms]
I was very bearish on this sector in 2007 and 2008 more on concerns about the consumption crazy American consumer finally needing to act rationally, without his/her house ATM. [Oct 3, 2007: A Top in Casino Names? Wynn and Las Vegas Sands] [Nov 1, 2007: China Can't Save Las Vegas Sands - It's Getting Crox'd] That was the correct call. However, now we have the government ATM replacing the house ATM. With 1 in every 6 dollars of American income now coming from government handout, who needs the house ATM anymore? Big brother buys things for us now.
While happy with my negative view that preceded the downside, I did not reverse course and get on the money train to the long side once it became clear that casinos were too large to fail. [Oct 28, 2008: Las Vegas Sands is now a $4 Stock] I have no idea how to value Las Vegas Sands but since better run Wynn Resorts is now valued at something akin to 80x 2010 earnings I guess valuation is a moot point. All that matters are charts nowadays. And LVS has a beauty.
I would like to buy more at $14 or below but we'll begin here with hopes of taking a loss on this first batch so I can buy lower. If instead the stock reverses and we just go ever higher from here, we'll assess adding more on the rebound. The stock was nearly $20 yesterday and right now trades in the $17.30s so we're just establishing a minor position of 0.5% of the portfolio. Obviously as this 13% drop since yesterday's highs shows, this is a very volatile stock and I assume dominated by daytraders so for all we know it could be up 15% tomorrow, or down 15%. Hence we'll move in slowly and space out some limit buy orders from here. $17.00 will be an interesting spot for Las Vegas Sands.
I guess this is just another way to play off the handouts of the government - as government pays for mortgage mitigation, appliance purchases, car purchases, home purchases ... that leaves more money for Americans to fly to Vegas and gamble and see shows. All part of the subsidized American economy, bought and paid for by your grandchildren.
Long Las Vegas Sands in fund; no personal position