Motley Fool going bearish on CF?

The Motley Fool has long been bullish on Cedar Fair, especially the articles by Rick Munarriz, but this article by Vitaliy Katsenelson takes a dimmer view of the company's financial picture in the wake of the Paramount purchase.

I think Katsenelson's view is very short-term. Munarriz seems to have some of the same concerns in his recent articles but is looking to 2007 to reverse any problems, and Hilliard Lyons is still touting CF as a buy.

Damn, I like this article!

Some quotes:

"...but a trip to a theme park is still one of the cheaper ways for a family to spend time together in the summer..."

Amen!

"Cedar Fair's theme parks usually serve customers who live within a 150-mile radius, so high gasoline prices are unlikely to have a significant impact."

Amen, again!

(I secretly wrote this article under a pen name and changed familiar 'gonch-isms' like, "Parks aren't priced high, expect them to go higher" and "People stay local when visiting parks" to the above wording. ;) )

Matthew Emmert just included an update of CF in his newsletter, which came out post-Paramount purchase. He takes into account some of the same things this article does, but he remains more upbeat.

There aren't that many companies out there paying a 47 cent a share dividend right now. So even if CF would reduce it and "upset" the unitholders, what else would they buy to still get a decent dividend?

Gonch, it sounds like you work for Shapiro :)

I hate to say it, because I generally agree with what the Fool folks say, but he's not digging deep enough.

First off, he seems to be judging the Paramount Parks on their historic numbers. But if you read through the various stories this year, you'd see that the difference between cap ex spending and margins versus Cedar Fair's numbers, there's a huge gap. It won't take years for those changes to happen. They're happening today if you believe the posts here lately about lay-offs. You even hear stories about how at PKI they have people crowding International Showcase with the coffee shop closed just a dozen feet from the people at opening. Duh, open it up!

Second, the notion that "underinvestment in its theme parks may increase the risk that it will share Six Flags' financial fate" is crazy! Six Flags is in trouble because of over investment, not underinvestment!

I don't see any increases in the distribution for awhile, but so what? Who buys units for a quick turn?

Wall Street.....duh! LOL. I would rather the price be down now, while I am considering buying it....and make it even more attractive to reinvest the dividends.....and then watch the stock price skyrocket in 2/3 maybe 4/5 years from now. If CF can do what they are known for doing (and they will), you will likely see anywhere from 25% to double increase in stock prices in that time. Just a guess...just a hunch. CF has been able weather out recessions and other economic problems. They are smarter than the average theme park operators.

You know my rant on quarterly result emphasis. Having worked for public and private companies, and even private companies that want to go public, the emphasis is ridiculous. Few companies grow for decades on end. In this case, the company has a strategy that is clearly long-term.

And let's face it, Paramount Parks didn't run very lean at all, and it was very top heavy. I don't think it's hard to imagine that they'll be far more profitable next year.

Layoffs from Paramount are no longer rumors according to the Cincinnati Enquirer in about 15 positions being cut at Kings Island. I was always under the impression Paramount ran more top-heavy at the corporate level. Evidentally it's at the park level as well.