WPTE

[1800GAMBLER]

It seems that WPT's online card room (wptonline.com) news (http://biz.yahoo.com/bw/050629/295215.html?.v=1) went overlooked and then all this Doyle crap has gotten in the way.

The price is still falling after the bid but this online site looks great, will have great marketing and great promotions to WPT.

[ QUOTE ]
"They have great growth potential for their online business, but that just launched last week. WPT has a great brand and high earnings potential because it can leverage the television show, but it's still unproven. My growth projection calls for 75% growth in earnings per year. I believe if it can capture just 1% of the world-wide poker market, that would add 50 cents incrementally to fully taxed earning per share. Now it's not taxed. When you combine online gaming with all of its other initiatives, I think a 75% growth rate is achievable and may even be conservative." (Mangini doesn't own shares of WPT Enterprises; ThinkEquity Partners doesn't have an investment-banking relationship with the company.)

[/ QUOTE ]

So decent company with a medium-long shot chance at becoming the size of partypoker? Thoughts?

[Ipodkid]

I put 40% of my non retirement risk funds into wpte this month, so far im feeling pretty confident about them, my thinking it the website is only 1 more reason to own this stock, I see 3 years down the line online poker being legal and regulated in the usa and wpt site nearly as big as party if so were rich /images/graemlins/smile.gif

[Sniper]

What is their edge?

There are many online poker rooms, why will players flock to the WPT site and put it past many of these already established sites?

You can hear an interview with the CEO on Wallst.net

[ttw22]

[ QUOTE ]
There are many online poker rooms, why will players flock to the WPT site and put it past many of these already established sites?

[/ QUOTE ]

Wasn't it WPT advertising that brought Party into the #1 position? If anything, shouldn't WPT advertising and branding do even better?

[laserboy]

I just checked out the site. It has 6 real money games going, all of them microlimit. How much do you think their interest in this site is worth?

To give you an idea... I see that their partner in the site, WagerWorks, is being valued at $50 million. Of course, unlike WPTE, they actually run a very successful and profitable business beyond the WPT Online site. Grand Virtual, which actually runs a successful poker site, was sold last year for $35 million. Why do you think WPTE is worth so much more?

[ QUOTE ]

So decent company with a medium-long shot chance at becoming the size of partypoker? Thoughts?


[/ QUOTE ]

I think you should read Barry Greenstein's chapter on poker players who think they are stock market geniuses.

[laserboy]

I trust Steve Lipscomb's evaluation of his own company more that I trust my own or anyone else. /images/graemlins/grin.gif

http://finance.yahoo.com/q/it?s=WPTE

Also, sorry if my posts come off as insulting. I get really worked up over this stock for some reason.

[Sniper]

[ QUOTE ]
I trust Steve Lipscomb's evaluation of his own company more that I trust my own or anyone else.

[/ QUOTE ]

Translation... in the last year he's sold down his stake in the company from 2.4 million shares to 1.6 million shares (a 33% reduction).

[Sniper]

[ QUOTE ]
Wasn't it WPT advertising that brought Party into the #1 position? If anything, shouldn't WPT advertising and branding do even better?

[/ QUOTE ]

WPT advertising may have helped jumpstart Party, but I don't think it was the only thing. Their initial AOL like send everyone in the world a CD with your software campaign at the beginning also played a huge factor in its early days.

[laserboy]

By my math, he has sold over 1.9 million of his shares. Are these the actions of a man that believes that WPTE will grow into a multi-billion dollar company?

[laserboy]

According to the Party Gaming prospectus, 87% of their business comes from the US. How will WPT Online fare against the hundreds of other poker sites when they are shut off from 87% of the market?

Check it out for yourself: WPT Online (http://www.wptonline.com/index.do)

[Sniper]

Could be simple diversification.

[1800GAMBLER]

[ QUOTE ]

I think you should read Barry Greenstein's chapter on poker players who think they are stock market geniuses.

[/ QUOTE ]

I have no idea about the stock market at all, have never purchased a share nor did i intend to with this one. I have little to no idea of how to research a company, i just thought this would make for a good discussion.

[meow_meow]

[ QUOTE ]
I put 40% of my non retirement risk funds into wpte this month, so far im feeling pretty confident about them, my thinking it the website is only 1 more reason to own this stock, I see 3 years down the line online poker being legal and regulated in the usa and wpt site nearly as big as party if so were rich /images/graemlins/smile.gif

[/ QUOTE ]

This seems like a not-so-great idea.
The only way WPTE is worth its current price is if it can tap the US market, and I can't see any congress wanting to legalize online gaming. I'd put money on the other side - that online gaming laws in the US will be tougher in 3 years.

Subtract out the potential of the online site for a second, a you have a company with a $400M market cap and trailing revenues of $17M. So it's trading at more than 20 times trailing revenues (and had a net loss in the past year).

So basically all of the value is in the potential of the online poker business. Sure, the software looks nice, but as already mentioned, nobody is playing there yet. There are already a number of sites based in the UK and elsewhere, targetting the non-US portion of the market (which is only a 15% of the pie to begin with).

[Al P]

If the WPT site allowed U.S. players I still wouldn't play there, there's no reason to.

Just ask yourself, "Do I really need another place to play online poker?".

[DesertCat]

Today's Wall Street Journal article. I find it interesting that they haven't been able to sell the PPT to TV, I had thought they'd see big rights increases over time from the WPT, but this implies not.


LONG & SHORT
By JESSE EISINGER

Are gambling stocks a good bet?

Buy-What-You-Know Strategy May Be
Bad Bet for Investors in Gambling Stocks
August 3, 2005; Page C1

In the 1960s, investors went bowling for dollars. The stocks turned out to be gutter balls. Investors quaffed craft-brewery shares in the mid-1990s. Check out a long-term stock chart for Redhook Ale Brewery for a look at the hangover from that binge. Fad chasers also scarfed up theme restaurants at the time, but Planet Hollywood went belly up.

And then there was Rainforest Cafe, which was bought out in 2000 for a fraction of where it once traded. The man behind that venture was its chief executive, Lyle Berman, who seems to have such an attraction to fads that one wonders where he keeps his hula-hoop.

Now he's at the forefront of another investor vogue: poker stocks. (The most recent addition to this market is PartyPoker, which went public in June in London.) Mr. Berman, proud owner of three World Series of Poker championship bracelets, is executive chairman of WPT Enterprises, a Nasdaq company that runs televised poker competitions and is up almost 200% since its August 2000 initial public offering. He is also chairman and CEO of WPT's majority owner, Lakes Entertainment.

You've watched the show; now buy the stock! Well, no. I like No-Limit Hold 'Em as much as the next guy, but that is the kind of Peter Lynchian buy-what-you-know thinking that can burn investors.

Early last month, right as the World Series of Poker was going on, a mysterious investor group bid $700 million for WPT, twice its market value. The group was headed by poker legend Doyle Brunson, who Mr. Berman says is a longtime card-playing buddy.

WPT management seemed to take the bid seriously, publicly confirming it and saying the company was looking into its credibility. "It struck me that they were playing it awfully by the book when on its face, it was flaky," says Tracy Lavery, who runs a small hedge fund called Somerset Capital that is short Lakes, betting it will decline.

"Any time there is a substantial offer that represents a premium of 100%, I think we have an obligation to shareholders" to look into it, says WPT's Chief Financial Officer Todd Steele. Mr. Brunson couldn't be reached yesterday.

The deal quickly fizzled without further ado -- but not before WPT's stock had jumped almost 50% and Lakes' by 20%. They've come down a bit since but are still above where they had been.

This short-lived bid aside, Lakes and WPT have other concerns.

Lakes has an ongoing dispute with the Securities and Exchange Commission involving accounting for its main business, making loans to Indian tribes to develop casinos that Lakes would manage. It is high-risk, because the tribes typically don't yet have casino-development rights yet. Lakes records the loans as assets, but SEC accountants are examining whether they should be considered expenses. The dispute has prevented Lakes from issuing financial statements since October. Mr. Berman has been saying that a resolution is just around the corner for months.

"Every time I talk, I say it's the next couple of weeks," he says. "Hopefully in the next couple of weeks, we should come to a resolution."

More worrisome, now both companies are without their auditor. Deloitte & Touche quit just before the $700 million bid surfaced, citing WPT's entrance into online gambling, a business that is illegal in the U.S. if stateside folk wager money.

And WPT last fall came up with the Professional Poker Tour (for pros only), but a television licensing deal has yet to materialize. "There has been a group of delays, no question there has," says Mr. Berman, adding that both companies are making progress.

WPT doesn't seem exactly like a growth stock. Its revenue in the first quarter was $4.1 million, flat from a year ago, and it posted an operating loss of $1.9 million. The World Poker Tour's TV ratings are down this year, according to Nielsen. In 2003, the show averaged 922,000 viewers an episode. That figure rose to 985,000 a show last year. So far this year, it is 888,000.

The shares trade at a rich 41 times analysts' projection of earnings per share in 2006. Shares of Lakes, which is expected to lose money this year, has a price-to-earnings ratio of 54 times analysts' 2006 projections. Casino stocks, by comparison, tend to trade in the 20s.

Lyle Berman says his favorite poker game is lowball, where the object is to form the worst hand. Investors might want to play a different game.

[StickyWicket]

one word for you:

diversification.


When it comes to over-concentrated positions in stock (as this one most likely is), three things can happen:

1) the stock can go up, and you make money
2) the stock can stay relatively the same price-you make no money
3) the stock goes down, and you lose money.

2 out of 3 of those things are bad. As this is true with all investment positions, being overly concentrated puts you at a higher risk.

You may want to consult a professional with regards to an independent evaluation as to how concentrated your position in this stock is in relation to the remainder of your portfolio---including your retirement investments.

FWIW.

Sticky /images/graemlins/heart.gif

[elena_elphie]

I think as a poker player, particuarly if poker forms a substantial portion of your income, you should be reluctant to invest in poker stocks. This is because if there is a downturn in poker you will be doubly hit, not only will your stocks go down, but your income will drop at the same time, so you are more concentrated in one industry than you might think.

On the other hand you might be something of an expert since you understand the industry better than the average investor, but I still don't think it is worth the risk, at least for me.

[tek]

Berman's 'stock vehicles' (for lack of a better word) have mixed results. DAVE (Famous Dave's restaurant) has done well. In fact the founder is now the head of the BIA. Some losers were Rainforest and New Horizon Kid Quest.

He did well managing Berman Buckskin (now Wilson Leather) and Grand Casinos.

WPTE--stay tuned.