Gumshoe Contest: Do It Yourself Analysis of this 10.6% “Big Yield Hunting” Gambling Stock

Hello, dearest Gumshoe friends — today we’re trying something a little different.

We’ve gotten a lot of requests about the latest pitch from Roger Conrad for his Big Yield Hunting newsletter, teasing that they’re “betting on this 10.6% Big Yield!” … and we’ve got an answer for you, thanks to the speedy and sagacious Thinkolator, but we’ve run out of time to cogitate on the actual stock for you (why? Well, it’s a long story involving James Taylor, the Independence Day Holiday, and a dog who decided that eating half his weight in food would be a good idea at 3am).

We’ll run through the clues, tell you the answer, then you analyze it for your fellow investors — and the best analysis wins a prize (more info at the end).

So here’s the pitch:

“‘Let me entertain you!’

“That’s the rallying cry of this sophisticated $1.5 billion gambling and entertainment company. It’s a world leader in wagering, gaming and Keno.

“More than 300,000 folks place bets on sporting and other events in 2,800 of this company’s outlets. And it also operates 8,500 electronic gaming machines—the highly popular way to gamble nowadays—that are found in licensed hotels and clubs.

“Plus, they have just inked exclusive monopoly licenses to run Keno for another 10 years! Keno is a fun, easy-to-play numbers game that offers the chance to win prizes. You could hit it big with a million-dollar jackpot… or easily double your money. With 3,300 Keno outlets, revenue is in the hundreds of millions.

“Everything about this company screams fun, fun, fun. And even if you don’t like to gamble, you’re going to love locking in a big, double-digit dividend yield for just peanuts.”

So that’s the basic idea — Roger Conrad and David Dittman are recommending a gambling stock that pays a big dividend. A few more clues?

“Now is the best time to pick up this company—it’s dirt cheap, too! Why?

“In 2007 the stock was trading at almost 3 times its current price. But we all know what happened then—the global economy tanked and solid companies like this went on a downslide.

“It didn’t help that the government in 2008 changed the way it awarded gaming licenses. The company sure took a hit on that one. The stock took a big tumble and continued sliding down until October 2011. It was torture being an investor in the company then. But not now.

“That’s because through the steep decline, the company kept paying out a dividend. And now it’s yielding a whopping 10.6%….

“Recent reports show revenue from its gaming and entertainment endeavors continues to grow. Underlying earnings are healthy, even in these ongoing tough times. Plus, it has a brand-new CEO ready to move the company forward by favorably refinancing maturing debt and securing long-term gambling licenses.”

So we’ll keep it short and sweet today — what Roger doesn’t mention is that this company is Australian (Australians are the world’s leading per-capita gamblers), which does help a bit in sorting out the answer.

But today’s teaser pick, according to the Mighty, Mighty Thinkolator is … Tabcorp Holdings (TAH in Australia, TABCF on the pink sheets). And you can bet that they first wrote about it in mid-May, because that’s when trading volume spiked briefly for the pink sheets shares. It does pay a strong dividend, it is a match for the other clues, and beyond that I must leave you to do the “do it yourself” analysis.

There’s a reward, though: Whoever does the best job of analyzing this company for us in a comment below, in 300 words or less, will get a prize — I’ll send you a 2010 or 2011 proof silver American Eagle coin, worth something like $50-75. So get your analyzing shoes on, get running, and let us know what you think — no other criteria for how you analyze, just tell us what you think of the company’s prospects and why, and I’ll read ’em and decide which comment I like the most. Enjoy!


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38 Comments on "Gumshoe Contest: Do It Yourself Analysis of this 10.6% “Big Yield Hunting” Gambling Stock"

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B.L. Jones
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B.L. Jones
July 5, 2012 4:09 pm

Crapped out. Discontinue

Jay L
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Jay L
July 5, 2012 4:27 pm

Look it is really simple. You can gamble like many australians do – via a rigged system just like us americans at las Vegas…or you can buy this cheap stock – hope there are many many more suckers who enjoy gambling then don’t – watch your ”casino” stock go up and be done with….all for just a few bucks and less headaches then going to thru all the ”gambling” bull and don’t forget the moral and ethical issues you feel when you loser the rent money or the future college savings….(;o)

jeefu
Irregular
-1
jeefu
July 5, 2012 4:45 pm
Thinkolater is correct. I just subscribed this past month to Big Yield Hunting. I don’t know a lot about this company other than the steep drop from $8+ to where it now sits, all in one fell swoop due to some kind of dispute with the government, which used to own the operations and regulates the gaming industry in unpredictable ways. My analysis goes not to this particular company but to the track record of BYH in general. I analyzed their portfolio from inception (about 20 months ago), and noticed that their current holdings are in negative 20% territory, not… Read more »
jeefu
Irregular
-1
jeefu
July 5, 2012 4:56 pm

p.s. to my earlier post: my analysis of the BYH portfolio is a hypothetical portfolio based on buying 1,000 shares of each stock in their current portfolio at the time/price they purchased or recommended it in the newsletter. They don’t use or recommend a specific number of shares, so the percentage of the entire portfolio could be different if the selections were not uniform at 1,000 shares each. Out of 13 picks, 10 are currently negative and 3 are in positive territory.

Ira Cotton
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Ira Cotton
July 5, 2012 5:17 pm

I don’t know if this would be material, but did you add in the dividends for the period held?

love5dogs
Irregular
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love5dogs
July 5, 2012 5:12 pm

Would rather you analyze. Hope this is just a one time deal. I trust your work. Thanks and please keep up your investigative work.

Ira Cotton
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Ira Cotton
July 5, 2012 5:15 pm

So long as it’s legal where they operate, I have no moral objection to “sin” investing (alcohol, tobacco & gambling) and have done well with MO, just recently got into STZ and BUD, and have really done well on the Hong Kong exchange with SJM Holdings, Wynn Macau and Sands China. I don’t know anything about TAH beyond what I just read, but if the problem with the government is fixable, then I might consider it. What could be safer than a government-sanctioned gambling enterprise? Excepting, of course, Social Security, Medicare, … 😉

Steve Hess
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Steve Hess
July 5, 2012 5:26 pm

Here is my swot at it. Tabcorp holds about the same size take as competitor Tatts Group Ltd. Tabcorp is into private gaming – Tatts Group runs government sponsored lottery systems. Tabcorp would find it difficult to enter into the government controlled space, and given it’s rather extreme drop recently, does not look very strong as a competitor. Without honest EBITA from Tatts Group – which is privately held, not traded, I would hold off on any investment in this area. Much as Aussies like to gamble, I would think the best choice would be “not here”

Boog
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Boog
July 5, 2012 5:59 pm

TAH-DAH! No Worries, Mate! Aussie surfers love it….And why not…the one year chart likens the Perfect Wave…Down Under it is! And Geeks so too do favor….seeing the obvious parallel to a Sigma chart on the successful search for the Higgs Boson!
BJK ETF up 11% on the year bouyed by a healthy bird – but this Macau pleads “Polly wants a cracker!” . Polly NEEDS a few crackers!

George
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George
July 5, 2012 5:25 pm

Even the 10% is a little bogus, based partially on the previous dividend level. Their dividend has been dropping for some time, and was at the latest 13 cents (2 distributions per year). That is about 8%, unless it drops again. They look like they have been going downhill for awhile and are still bleeding money, though they are fairly cheery about it in the financial report.

G Bailey
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G Bailey
July 5, 2012 5:34 pm
TABCF. MKT CAP 12-31-11 2.17B Profit margin 15.34% Operating Marg 19.36% REV 3.07B EBITDA 830.85M NET INCOME (LOSS) -33.93M Cash 167.79M Debt 1.04B Book Value 1.83 52 Week Change In Share Value -10.14% Shares Outstanding 703.72M Float 703.03 Would let Others earn this 10.7%
Christopher Weingartner
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Christopher Weingartner
July 5, 2012 5:42 pm

TABCF DIVs 2007, 0. 2008; 0, 09, .65; 10, .55; 11, .43; 1st one half of 12, .13; while the stock price is sinking off its high. I don’t know what Conrad knows, but I will stay away.

Franklin White
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Franklin White
July 5, 2012 6:21 pm

TABCF sure sounds like a “pig in a poke” to me. It traded 1300 shares today and there are a
number of days when it doesn’t trade at all, so it would seem to me, you can almost forget
about technical analysis. And it would appear that the dividend is heading south almost as
fast as the approval rating of the U.S. Congress. Therefore, unless you just want to gamble your money away on this stock, you are wasting both time and money.

Wolcott Kenyon
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Wolcott Kenyon
July 5, 2012 6:32 pm

Very hard to find serious info on this. Thinly traded on the pink sheets, for me a big negative.
i will never buy a stock just for its yield. For those who like to roll the dice I would have a firm mental stop of 11%. The problem with such is it could blow through that in a heartbeat.

Maureen
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Maureen
July 5, 2012 6:32 pm

Grey market- too risky.

Bill D
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Bill D
July 5, 2012 6:54 pm

Well my take on the pro’s of this stock is essentially based upon the time honored human ability to gamble when times are good, when times are bad and all times in between. The fact that Aussies are the worlds biggest per capita gamblers is a bit of a bonus, although I would have put my money on it being their relative neighbors the Chinese. So we have a company catering to the worlds most rabid gamblers next door to a soon to be travelling 2nd most rabid gamblers. Maybe a good bet…

barndoor
Irregular
14
barndoor
July 5, 2012 7:15 pm

Hmm,
All I want to see is an analysis of (assuming no special govt interference or bad news) the big question: IS THE YIELD SUSTAINABLE? (you know, payout ratio and upcoming refinance needs and the like)
I’m willing to endure lots of “negative market events/influences” and even a few small “management missteps” whilst equity wanes, but if they have a solid, sustainable business that would only make the (percentage) yield go UP.
Nothing written here (so far) has made me think positively however….

barker
Member
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barker
July 5, 2012 8:38 pm
Tabcorp Holdings is definitely not a value stock, it is a dividend stock which is the only reason an investor would be interested in it. Sure it has high debt, but its profitabillty of 15% and Operating Margin of 19% are ok for a dividend stock. It’s forward P/E (for year ending June 2013) of 12.87 is ok too. When the economy is bad, legal (and illegal for that matter) gambling increases due to people getting desparate for easy money. I see Tabcorp continuing to be a good dividend stock. Need a crystal ball to determine if it will revert… Read more »
Pihoenix 7
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Pihoenix 7
July 5, 2012 9:00 pm
Most of these newsletters pumping various “Story Stocks” are not worth Dick. Folks I have tried many stock newsletters, and fortunately with the Trial period usually given …….you can get a refund ……BUT always keep good records , by marking down the date you started , and also SAVE the original ad literature with the guarantee . Using a credit card will also give you added protection when you seek your refund., and for the newsletter described above ……..by the reviews I read here , you probably will. Here are 8 of my own picks for 7/6/12 ……provided the markets… Read more »
Bud Crow
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Bud Crow
July 5, 2012 9:01 pm
YOU MIGHT WANT TO READ THE INVESTOR SECTION ON THE COMPANY’S WEBSITE: Notice to shareholders – Tabcorp and the Victorian Government licence structure As shareholders are aware, the Victorian Government announced on 10 April 2008 that the existing gaming operator licence held by Tabcorp Holdings Limited will not be renewed when it expires in mid-2012. The Government’s announcement outlines the mid-2012 arrangements as follows: •Gaming: A new model under which hotels and clubs will directly hold gaming machines licences •Wagering: The current single licence structure will be retained •Keno: There will be a single Keno licence with expanded distribution The… Read more »
Ron A
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Ron A
July 5, 2012 9:16 pm

I did a lot of “Gumshooooing when Rodger and David first opened this letter. Timing was bad and most of what was uncovered dropped badly with the market. Mucho red and out of most holdings fast!!
I’ve followed Personal Finance and the Canadian Edge for years…and they are still top notch. Unfortunately Rodger ( and help) have gone way to far into risk with the Big Yield Hunting; The Cocktail Stock and now the Australian Edge. They seem too far into risk, with little growth or dividend sustainability. NO!

Jim H.
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Jim H.
July 5, 2012 11:42 pm

I agree with Ron on this one. Conrad’s analysis & picks for CE and Ute Forecaster, as well as his contribution to PF have been useful over the years. Seems as if he may be letting his name be attached to some more risky products now.

Rick
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Rick
July 5, 2012 10:02 pm
Per the 2011 year end annual report; Total Equity $1.210.9 Bil less INTANGIBLE assets of $1.805.7 Bil = actual equity of $594.8 Bil NEGATIVE net worth. Operating cash flow (per share) starting from 2007 going forward 84.2, 82.0, 74.3, 48.2, and 9.4 cents (2011). This should be the OOPS flow. Total current assets/Total Current Liabilities for going companies should be 2/1, and this one is almost 1/4. This reflects a company’s ability to meet its near-term obligations. Remind me, did Roger say a -10% return going forward? My hunch is that would even be wishful thinking.
ROBERT FOURNIER
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0
July 5, 2012 11:12 pm

TABCF COMPANY has a good-sized Total Equity, plus Intangible Equity, which equals $595 Billion in Assets. TABCF has operated successful and profitable Keno games for several years, and is a primary player in the industry. The dividend proves that this company intends to reward its stake-holders for their investment in the company. The price chart has followed the ups and downs of the S&P 500 since the middle of May, 2012. It is a buy at $3.10.

Igor V.
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Igor V.
July 6, 2012 12:28 am
This is my first time after all years of reading, so please be gentle. Thinkolator is correct as usual this is-Tabcorp Holdings, from Wikipedia – Australian wagering, gaming and Keno operator and one of the world’s largest publicly listed gambling companies, they carry a supporting media arm. I am nuts about good dividends , but this company not bringing too much excitement, unless you want to gamble, not invest. Here is my view: Net Income Avl to Common was -33.93M Total Debt (mrq):1.04B 52-Week Change3:-10.72% Shares are traded in range 2.44 (low) to 3.49, so it is less than $5.00… Read more »
Stuart Watkins
Guest
0
July 6, 2012 6:06 am

You have it all wrong.
This is the way to Jump Start the American economy.
President Obama is said to have send a Special Service detail to Australia to promote this company, because there is no presidential plan in place.
If all Americans put up just $1,000 each, All Americans will start receiving over 10% in return on an annual basis.
This way American will not need a new Stimulus Plan.
That is what the Secrete Service detail detailed.

Stuart Watkins
Guest
0
July 6, 2012 6:08 am

This is a clever idea and one every true blue American should grasp and grab onto before all the stock is bought up.

larry williams
Guest
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larry williams
July 6, 2012 8:31 am
While dividend yield has gone up; Jan 08 4.79, Dec 08, 5.01, Jun 09 9.08, J un 10 8.69 Dec 10 6.85 Jun 2011 9.21 and Dec 11 was 11.72 Revenue (in millions here)has been for same years; 3.9 , 2.1, 4.2, 2.1, 4.2, 1.5, 2.9 and 1.5 for Dec 11 Interm. Cash is King. Where is the cash going to come to pay the dividends? Thatworries me. Plus the management of the company, while coming from major companies, has flitted back and forth from one company to another. The stock is currently sporting a 45.3 eps; seems expensive in… Read more »
germz
Guest
0
germz
July 6, 2012 11:08 am

I think this will be a perfect investment because the Australian dollar goes neck and neck with the US $. And after looking at the price history your money invested in this company
can stay for a long time while in the process collecting huge dividends.

Don Exum
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Don Exum
July 6, 2012 12:13 pm
TABCORP ANALISIS: This Australian Stock posts a 15.6 % Div as of last trade 7-06-2012 with 1,400 shares traded.. Stock has a market cap of 2.2 Billion.. Comparing 20 weeks trade closings, beginning July 07, 2011 through December 14, 2011. the average trade closing was $3.03 as compared to July 06, 2012 as $3.08.. This stock is flat moving sideways .. with 20 week low average trade volume of 1,398 shares which confirms static sideways strength.. While the Dividend is inviting, the Risk to reward leaves me with PASS on TABCORP or TABCF on Pink Sheets..
otradovec
Irregular
1
otradovec
July 6, 2012 2:00 pm

don’forget the Legas motto: to loose money is fun.

Ira Cotton
Guest
0
Ira Cotton
July 6, 2012 1:20 pm

Any analysis based on pink sheet trading of shares in the U.S. is nonsense. These shares primarily trade on the Australian stock exchange and can be bought directly there through certain U.S. brokerage firms (such as Interactive Brokers). Take a look at the trading volumes in Australia for a sense of where the stock is heading and download the company’s annual report from its web site for analysis. Anything sort of that is a waste of time.

Igor V.
Guest
0
Igor V.
July 6, 2012 2:51 pm

Ira,
I read company Financial Statement and Balance sheet and it is not looking optimistic to me or inviting to invest in this stock. Unless I am reading wrong, which is also posibility.

Del Ojo Zafado
Guest
0
Del Ojo Zafado
July 6, 2012 6:44 pm
I do not know about this stock…. but Rodger has picked some decent yield themes in the past. I just do not like the gambling theme for the volatility. I just don’t see it as a reliable yield. Las Vegas Sands has been on a tear again on the Macao and Singapore? casino deals. But a while back it got hammered down just like this stock. I would scan the ABCS, DVYA and EPP portfolios for some decent dividend leaders in Australia that may have suffix (F) symbols trading on the pinks here in the US . Australia is lowering… Read more »
blackjack
Guest
0
blackjack
July 8, 2012 2:08 am
in short tabcorp’s license to operate jackpot machines is up for renew in Aug 2012 – THE Baillieu government is facing a $1.2 billion budget black hole, with gambling giants Tatts and Tabcorp soon to begin legal action to recoup hundreds of millions of dollars in poker machine licence compensation payments they believe they are owed. The Gov says its not going to pay and so there will be long and costly legal issues – so I would buy shares in the law society before tabcorp. There has long been an issue with these jackpot machines in that pensioners are… Read more »
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