Century Casinos: Transformational Acquisition Provides Upside

Shawn Kravetz of Esplanade Capital presented his in-depth investment thesis on Century Casinos (US: CNTY) at Best Ideas 2020.

Thesis summary:

Century Casinos is an owner/operator of casinos. Century has closed on the transformational acquisition of three properties from Eldorado Resorts, yet the shares recently remained ~25% below their 2019 highs, achieved after the acquisition was announced. With the company’s existing assets in Canada, the U.S., and Poland ramping organically, Century appears poised to more than double corporate EBITDA in 2020, leading to the industry’s lowest EBITDA multiple (6x) despite robust growth.

While Century has added some debt to finance the acquisition, it still has one of the least leveraged balance sheets in the industry and is positioned for further acquisitions in 2020. Century presents a catalyst-rich play on the North American casino industry. The stock is worth $14 per share in Shawn’s base case.

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About the instructor:

Shawn Kravetz is President and Chief Investment Officer of Esplanade Capital LLC, an investment management company he founded in 1999. Esplanade Capital LLC manages capital for a small number of like-minded families, private investors, and institutions. Esplanade’s value orientation, driven by patient capital and proprietary research/analysis, has generated substantial outperformance versus benchmarks since inception. The firm specializes in smaller companies, out of favor & below the radar companies, special situations, and turnarounds. Prior to founding Esplanade, Shawn was a corporate executive and strategic advisor, including: Principal at The Parthenon Group, a leading strategy consulting boutique, where he advised chief executives on corporate strategy; Director of Strategic Planning and Corporate Development at The CML Group (NYSE traded), where he oversaw activities at subsidiaries including NordicTrack, The Nature Company, and Smith & Hawken; Consultant with Monitor Company, a leading strategy consulting firm. Shawn received an MBA with High Distinction from Harvard Business School in 1995, where he was awarded: The Thomas M. and Edna E. Wolfe Award; The Henry Ford II Scholar Award; and a Baker Scholarship. Shawn received an A.B. in Economics from Harvard University, magna cum laude, in 1991. Shawn has also been active in his community, having served as: Steering Committee Vice Chairman of The Museum of Fine Arts Council at The Museum of Fine Arts Boston; Member of the Steering Committee of The Vilna Center for Jewish Heritage; and Treasurer of the PTO for the Frances Jacobsen Early Education Center. Shawn currently serves as Trustee and Chairman of the Investment Committee at Temple Israel, Boston. Shawn formerly served on the board of directors of Nevada Gold & Casinos, Inc. where he was Chairman of the Corporate Governance and Nominating Committee and a member of the Compensation Committee.