Not all markets move as one whether on the global or domestic front and it’s an area where MM has been caught once or twice over recent years i.e. picking the macro picture only to fail to pick the optimum vehicle (s) to play such a view. A great example has been in the Australian Tech Sector through 2023, fortunately, we played this one reasonably well i.e. Xero (XRO) +77% and REA Group (REA) +35% compared to say Altium (ALU) only rising +6%. When we stand back and look at gambling/casino stocks from a global perspective the performance by local names has been awful over the last year, in 2023 alone Star Entertainment (SGR) is down -35% whereas MGM Resorts (MGM US) is up +44% providing one of the best illustrations in years that not all stocks/sectors move as one, either domestically or globally.
There have been a number of major issues locally with the likes of SGR and unlisted Crown but our penchant for an inquiry in Australia is arguably the main headwind – just ask the banks and aged care operators. We find it hard to imagine that Australian casinos are the only premises used by organised crime to launder funds and we question if the optimum course of action is for large fines to vanish into the government’s coffers while directors who received large bonuses along the way simply walk away untarnished into their next role. At MM we believe stamping out corruption and dangerous practices is a must but we’re not convinced it’s always executed in the best manner – the shareholders have often been the primary loser which includes millions of Australians in their Super.
NB One thing we have learnt is at the mention of a government enquiry the best form of attack is defensive i.e. sell and stand on the side lines.
- We believe that the US Gaming Sector remains better positioned than our own.
This morning we’ve selected 4 stocks whose revenue includes gambling in Australia where having a punt is supposed to be part of our culture/DNA!
