I wanted to share some exclusive content on Trading Common Sense today regarding Melco Crown Entertainment (NASDAQ: MPEL). I’ve written in the past about uncertainty being investors’ biggest fear. It’s been a rough year or so for Melco investors like me, but when I read what Melco CEO Lawrence Ho had to say recently about the company’s future, I thought to myself that I couldn’t have explained my personal outlook for the company any better than Mr. Ho did:
“Once people figure out what the new normal is, then ultimately the population base and the consumption power is so great that it’s all going to come back,” Ho said. “The problem is nobody knows what is the new normal right now.”
What’s happening in Macau right now is fear of the unknown. Wealthy Chinese don’t know what to make of the corruption crackdown or the recent downturn in the Chinese economy, so they are laying low for a while. In my opinion (and Lawrence Ho’s opinion) there is absolutely nothing secular about declining gaming revenues in Macau. When people get fearful, they get tight with their money. But when the fear subsides, the cash comes flowing in.
I have no idea if the cash will come flowing back into Macau in 2015 or 2020, but I believe it will come back. Melco is currently my third largest stock holding, and I even recently supplemented my Melco shares by buying a small amount of July call options for Melco at a $19 strike price. I believe that Melco is at or is close to the bottom, and I’m hoping 2015 will be a much better year for Melco shareholders.
Stay tuned to Trading Common Sense in the next couple of weeks for more exclusive content, including updates on my long-term investments in oil.
Read more of what Melco CEO Lawrence Ho had to say to Bloomberg by clicking here.
Read about Melco’s crazy Martin Scorsese-directed commercial starring Robert De Niro, Leonardo DiCaprio, and Brad Pitt by clicking here. Apparently it’s a real thing.
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