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.
"...but a trip to a theme park is still one of the cheaper ways for a family to spend time together in the summer..."
"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."
(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. ;) )
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?
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?
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.
You must be logged in to post