Peak Resorts: The New ASC?

[Gforce]

A few of the guys who I ski with, and our kids are on the race team at Mount Snow together, not to mention that 3 of the 4 of us live within 200 yards of each other up in VT, are finance guys in Boston, and went to the prospective investors presentation that Peak made a few weeks ago.

As they put it, the IPO is just a way to fund the looming 40 million payout they have for the Mount Snow/Attitash purchase, and then help fund, along with the EB-5 $$ they're looking to raise the major capital plan at Mount Snow. The IPO at $9 was less than the $10-12 that they had been thinking at one time, as a sign of the questionable nature of the IPO from an investors perspective.

As of this morning, its trading on NASDAQ (under the SKIS name) at $7.79 a share, with a market cap value of a little over 108 million. The current range in share price since the IPO has been from a low of $6.95 to a high of $9.19 a share. My finance buddies were thinking that long term, it will settle in the $7 to $8 range

You don't want to touch these types of stocks in this market, many other alternatives to make a few bucks with less risk. A couple points: - The EB5 is not a sure thing, the quota is already reached and it requires Congress to renew. Also, a $38,000/month lease on a zip line that is a part time revenue stream will be a huge drag on their cash flow.

 

[joshua segal]

You don't want to touch these types of stocks in this market, many other alternatives to make a few bucks with less risk. A couple points: - The EB5 is not a sure thing, the quota is already reached and it requires Congress to renew. Also, a $38,000/month lease on a zip line that is a part time revenue stream will be a huge drag on their cash flow.

Those who invested in Killington in 1958 won't agree with you. Those who invested in ASC in the 1990's will. But there are many kinds of investors - and some who even have a few percent of their resources in what they call "a play account" where they take risky investments knowing there is a good cocktail party story on the winners, and no need to discuss the losers.

EB5 money is interesting and it is a very profitable program that yield, if I remember right, about $5 billion a year in high-risk, low yield industries that can create jobs. It is doubtful the Congress won't figure out a way to renew it. Funny how the anti-immigration folks haven't complained vocally about this program!

 

[machski]

You all need to see the Jay thread here and their handling of the EB-5 program. I know Peaks was holding them up as the poster child of EB-5 and I'm not sure I'd want to associate my companies hopes in that program with them any longer.

 

[Gforce]

Those who invested in Killington in 1958 won't agree with you. Those who invested in ASC in the 1990's will. But there are many kinds of investors - and some who even have a few percent of their resources in what they call "a play account" where they take risky investments knowing there is a good cocktail party story on the winners, and no need to discuss the losers.

EB5 money is interesting and it is a very profitable program that yield, if I remember right, about $5 billion a year in high-risk, low yield industries that can create jobs. It is doubtful the Congress won't figure out a way to renew it. Funny how the anti-immigration folks haven't complained vocally about this program!

This is a dividend play at best. We love to ski, board, hike etc.. but as investors... A good chunk of my discretionary income is spent in this industry, but my investment portfolio is elsewhere. There's no Growth in this space.

 

[BenedictGomez]

As they put it, the IPO is just a way to fund the looming 40 million payout they have for the Mount Snow/Attitash purchase, and then help fund, along with the EB-5 $$ they're looking to raise the major capital plan at Mount Snow.

The entire IPO is for their debt, > $80 million is earmarked for it. You get about $66 million if you add Mount Snow + Attitash + Crotched. If you haven't looked at the loan terms yet, do so. They're amazing.

The IPO at $9 was less than the $10-12 that they had been thinking at one time, as a sign of the questionable nature of the IPO from an investors perspective.

If you think that's "questionable", just ponder the fact that the failed IPO back in 2011 had an expected offering price at $18. So just 36 months later they agreed to sell the same company for 1/2 of what they claimed it was worth just 3 years ago. Hmmmmm........

My finance buddies were thinking that long term, it will settle in the $7 to $8 range

Once they cut the dividend (and they will), it will drop like a rock, sub-$7 for sure. In the very short-term, I think it's probably a decent trade due to the 7% payout, but you want to exit before that dividend-trap gets sprung.

 

[joshua segal]

...

Once they cut the dividend (and they will), it will drop like a rock, sub-$7 for sure. In the very short-term, I think it's probably a decent trade due to the 7% payout, but you want to exit before that dividend-trap gets sprung.

Nonsense. It's like any other stock. When it goes x-dividend, the stock nominally drops in value the amount of the dividend, but in truth, it is already imputed in the value of the stock; The only relevant thing to stockholders is that dividends are taxed differently from capital gains - and if the stock is part of an index, which SKIS isn't, the index drops a bit.

 

[joshua segal]

You all need to see the Jay thread here and their handling of the EB-5 program. I know Peaks was holding them up as the poster child of EB-5 and I'm not sure I'd want to associate my companies hopes in that program with them any longer.

There was a documentary on PBS radio on EB5 money and one of the people interviewed, a British man, whose money was invested in Jay Peak, said, "He looked at his $500,000 as his ticket to America and was thrilled that he was actually receiving almost 2% per year on it."

 

[BenedictGomez]

Nonsense. It's like any other stock. When it goes x-dividend, the stock nominally drops in value the amount of the dividend, but in truth, it is already imputed in the value of the stock; The only relevant thing to stockholders is that dividends are taxed differently from capital gains - and if the stock is part of an index, which SKIS isn't, the index drops a bit.

Re-read my post. You either don't understand it, or you had a reading comprehension failure.

 

[VTKilarney]

There was a documentary on PBS radio on EB5 money and one of the people interviewed, a British man, whose money was invested in Jay Peak, said, "He looked at his $500,000 as his ticket to America and was thrilled that he was actually receiving almost 2% per year on it."

Talk to me when he wants to get his principal back.

 

[machski]

Talk to me when he wants to get his principal back.

In fairness, I'm sure some "investors" are willing to spend $500,000.00 as their ticket to green card status and don't care if they see it (principal) again.

 

[marcski]

In fairness, I'm sure some "investors" are willing to spend $500,000.00 as their ticket to green card status and don't care if they see it (principal) again.

That is the American Dream, no?

 

[BenedictGomez]

Down > 7% today after missing on earnings.

 

[thetrailboss]

Down > 7% today after missing on earnings.

What were the reporting dates?

 

[EPB]

3Q'15 just ended on January 31. April 30 is the FYE.

 

[thetrailboss]

3Q'15 just ended on January 31. April 30 is the FYE.

OK, so I would expect that the next quarter would be good......or at least should be good.

 

[Newpylong]

Trading up this morning and some have moved them to a BUY.

 

[BenedictGomez]

OK, so I would expect that the next quarter would be good......or at least should be good.

You would definitely think, but wasn't President's Weekend terrible this year due to the cold? That's the only thing that worries me, because PDW is a big chunk of a resorts revenue. Might have to search the net for Mount Snow PDW trip reports.

After that, however, I agree, I think the back-half of this season could look really good (though last year's back-half was good too when considering comps).

Trading up this morning and some have moved them to a BUY.

Down another 5% today.

I wouldn't own this garbage long-term, but with a now ~8.7% yield, it might be interesting in the near-term.

 

[BenedictGomez]

SKIS pre-announced today.

Not sure why they did that, but revenue was similar to last year, and essentially in-line with Wall Street's expectations.

"While our properties were not immune to the weather challenges of the 2014/15 ski season, we continue to expect we will report revenue and EBITDA for our full 2015 fiscal year (ended April 30, 2015) near the $105.2 million in revenue and $25.4 million in EBITDA we reported for fiscal 2014. We see the ability of Peak Resorts' properties to perform this well when weather conditions were less than stellar as a testament to their resiliency and their ability to generate solid cash flows over the long term. "From this solid base, we continue to look to implement on our strategic plan, which calls for a mix of organic growth, real estate development and acquisitions.

 

[dlague]

SKIS pre-announced today.

Not sure why they did that, but revenue was similar to last year, and essentially in-line with Wall Street's expectations.

We see the ability of Peak Resorts' properties to perform this well when weather conditions were less than stellar as a testament to their resiliency and their ability to generate solid cash flows over the long term.

less than stellar - must be talking about OH and PA? I thought this season was pretty good in VT, NH, MA and ME

 

[skifree]

less than stellar - must be talking about OH and PA? I thought this season was pretty good in VT, NH, MA and ME

+1000