Last November, we noted that a Fidelity fund’s SEC filing implied that it valued Station Casinos’ equity at approximately $1.12 billion at the end of August. On January 28, the same Fidelity fund filed a new quarterly report and presented the values of its holdings as of November 30. The value of its Station Casinos stake dropped by over 5%.
|Value as of 8/31/15
|Value as of 11/30/15
|1,194,419 shares of Station Holdco LLC
The implied valuation of Station Casinos would have thus dropped to $1.06 billion at the end of November.
Fidelity, whose funds collectively own 8.7% of economic interest in Station Casinos, did not disclose its valuation methodology. A Fidelity spokesman did say in a statement to the Wall Street Journal last October that the firm has “a rigorous and thorough fair market valuation process for mutual fund holdings.”
See more of our analysis of the Red Rock Resorts/Station Casinos IPO:
- Download our unauthorized roadshow presentation, “Red Rock Resorts: A Second-Class IPO” here.
- The insiders are cashing out at a high price compared to the company’s estimated equity.
- Growth concerns in the company’s primary Las Vegas locals market and the lack of new development agreements in the tribal gaming market.
- The tax receivable agreement could drain substantial amount of cash out of the company and affect free cash flow.
- The dual-class structure will make public investors second-class shareholders.
- The lack of disclosure regarding the regulatory problems of Deutsche Bank, a 25% current owner