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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Jurgis Bekepuris who wrote (51721)	6/14/2013 11:33:14 AM
From: MCsweet	Respond to of 78745

AERL, Your points are well taken. Operating cash flow recently for 2012 and Q1 2013 has been decent. It was terrible bad a couple years ago as they jacked up their markers receivable by lending money to junket operators to expand their business. However, they have been paying a nice dividend and buying back stock. The rights offering is to pay off loans to the company made by founders as a prerequisite for a Hong Kong listing. The markers receivable is a huge number and admittedly dicey (and unfortunately went up in Q1). The risk on that has been offset by the loans from the founders (the loans from the founders can be viewed as a collateral on the market receivables, as they have guaranteed the markers receivable debt). I have called to the company to see how that shakes out once the loans are repaid. It is quite possible the company could have to write down a large amount of markers receivable at some point. I am looking for a shorter-term play -- buy on weakness from the rights offering and sell into strength from the Hong Kong IPO, but there are definitely many risks and complications to this one. MC