Public investors in Red Rock Resorts should ask: Does management have plans to pursue sports betting or other gaming opportunities outside of Nevada? If not, why not?
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Entries by Ken Liu
With the Palms project, Red Rock management wiped out $1 billion of shareholder equity. More than $8.00 per share of equity value evaporated because of the Palms project.
The results of our survey reveal shareholder respondents expressed consensus for a hybrid format for the annual general meeting, took issue with the dual-class capital structure and other takeover defenses, and shared their preference for a more diverse board, an independent board chair, and their doubt regarding shareholder representation on the board.
Red Rock’s shares have underperformed both the market and its peers, year-to-date. Baron’s efforts to double down on Red Rock’s stagnant stock suggest its stock pickers have fallen into a sunk cost trap, unwilling to recognize the opportunity cost they’ve incurred by putting millions more of their clients’ money in RRR over the past year.
Cohen & Steers, Inc. (NYSE: CNS) filed a Schedule 13G on December 12, 2016, announcing its beneficial ownership (at the time 15.94% of Class A shares) in Red Rock Resorts. This was an interesting move by Cohen & Steers, which is often praised as the “king of REITs” and self-described as “pioneers in REIT investing.”
What is Station Casinos doing with Palms? The company has committed nearly half a billion dollars to the property. What kind of management experience can Station bring to Palms? Does Station have the management know-how to operate an almost-Strip property like Palms?
Six law firms have announced investigations into Red Rock Resorts following the company’s annual meeting in July, when shareholders showed their dissatisfaction with the company’s directors.
Now that Red Rock Resorts is private jet-free, do its executives simply fly commercial as they try to look for growth opportunities outside Las Vegas, even around the world (e.g., Brazil)? And should billionaire owners of super yachts continue to be subsidized by Red Rock Resorts outside shareholders, who have been paying the Fertittas’ income tax with cash “tax distributions”?
Outside shareholders of Red Rock Resorts demonstrated their dissatisfaction with the company’s directors at its July 6th meeting of stockholders, with the most opposition shown toward the independent directors.
In this report we argue that it is necessary for Red Rock Resorts’ shareholders to withhold votes from the company’s three independent directors – James E. Nave, D.V.M., Robert E. Lewis, and Robert A. Cashell, Jr. – on their proxies for the company’s July 6, 2017 annual stockholders meeting.