Sky is one we are interested in. Quality gaming and leisure assets in New Zealand, seemingly better operated, given earnings and margins.

We’ve made money in the past from owning Crown on valuation grounds (then sold into the takeover); the underlying stocks are quite volatile at present, given relentless regulatory pressures.

They are cheap, however, cheap for that very reason (the attempts to snuff out problem gambling and attempts to improve the corporate/operational governance of casino operators around AML, amongst other things).

The CEO resigned back in October…

…and guidance from the 27th of October lasted for roughly 6 weeks or so.

A modest downgrade perhaps, and lots of moving parts to it (e.g. the carpark, legal issues with Adelaide, lurking in the background and the Auckland license issue), but it is fair to say the share price weakness will continue.

It is amazing how gaming has also been vulnerable to macro pressures this year (normally it is considered somewhat defensive; in our view it is more due to increased competition from online gaming/gambling/sports-betting, and thus less “in person off to the casino” betting).

Value is there, but not for the faint hearted (it is a very well held stock in the more absolute return or value oriented strategies, given the high risk high reward nature) and for the more conservative, waiting until the outcome on the NZ licence suspension issue is resolved, perhaps similarly so for Adelaide, may probably be the most prudent strategy.

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