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I was recently chatting with a retail, commissioned stock broker acquaintance here in the Twin Cities (other than his chosen profession, he's not too bad a chap...)

His take on why RAIN stock seems to be residing in the doldrums of late might have something to do with Lyle Berman's association with the company. His take is that (at least among the Twin Cities' stockbroker crowd) Berman has a knack for cratering companies and still come out smelling the proverbial rose, leaving the unfortunate bond and stockholders holding the bag. This particular guy likens him to the upper-Midwest's version of Donald Trump in that regard. That makes them extremely uneasy about aggressively pushing the stock.

Some of them (and their clients) got burned pretty badly by the Stratosphere melt-down. I think he (Berman) was pulling some hefty profits and back-door fees out of Grand Casinos right before the Stratosphere toppled over and took Grand's stock price along for the ride. He thinks there were some improprieties involved in Berman's previous associations with Wilson's Leather as well, although he was fuzzy about the details.

So, anyway, for what it's worth, there's a possible explanation for some of what ails RAIN (the stock price , not the company. I'm personally long both the company and the price.) The above is a perception of Berman, which may or may not be right or justified. It's certainly not, IMHO, something to base an investment decision on in the context of the cash, growth potential, etc. this company has. I reiterate that this is not a bit of information I'm using to come up with "my" valuation of this company, but one I use to perhaps understand where other folk's valuations are coming from.

But it still might be a factoid to file away in your RAIN folder for future reference; if the ship Rainforest ever starts taking on water, Berman won't be the last one to take to the lifeboats.
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>>>Some of them (and their clients) got burned pretty badly by the Stratosphere melt-down.<<<

If you ask me, the TOWVQ debacle had more to do with a certain person whose initials are B.S. than Lyle Berman. People I have talked to familiar with the situation have said that Stupak wanted his Vegas-World replacement opened as soon as possible and at all costs. Needless to say, the casino resort opened entirely too early and this as much as anything caused TOWVQ to be where it is today.

Berman also doesn't have the stranglehold over RAIN like he does some of his other companies. Let's count the companies his in on... WLSN, GND, RAIN, TOWVQ, IGCA, KIDQ, WRSI... this guy is everywhere!

-Paul Larson
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After posting this note, I was having an offline-chatter session (water-cooler talk) on the subject with a fellow Bull on RAIN. His opinion is he doesn't know and doesn't care who L.B. is. What's important to him is that the company is such a hot concept, is so well funded, that success looks like a lock. I got an e-mail saying essentially the same thing. I fully agree that RAIN at this point in time, at this price, looks like shooting fish in a barrel. But I can't agree that it's smart to bury your your head in the sand and not watch L.B. like a hawk. Here's why.

If you are a Benjamin Graham purist, you arrive at your fair valuation of a stock by locking yourself in a room with a 10-K and a Value Line. You throw a lot of numbers into a spreadsheet, perform some analytic alchemy and out pops a number that's the fair value of the stock. You consciously try to tune-out any non-quantitative data that can't be categorized and quantified for fear it will cloud your rational judgement.

If, however, you read any of the writings of Fisher, Lynch, and Buffett, you realize that while they pay as close attention to Graham's numbers as anybody,they also do give weight to qualitative issues. High on the list, especially for Buffett is the quality or maybe the "qualities" of a company's management.

It's relatively easy for someone like Lynch or Buffett to make these judgements, or at least to have access to the data needed. If Warren Buffett makes a call to Coca Cola, his call goes through to the CEO. Immediately.

But how do those of us who manage portfolios smaller than Berkshire Hathaway or the Oakmark Fund get this kind of aceess? Answer-we don't.

Ideally, as a shareholder in RAIN, I would like to have the opportunity to meet and know the "manager" of "my" company. But though we only live about 15 miles apart, we travel in different circles (his are more expensive than mine).

Thus, I have to sniff out every morsel of information I can, whether historical, anecdotal, whatever, donsider the sources for their veracity and reliability (many times there may not be much of either), and attempt to synthesize a judgement.

I think in attempting to evaluate the quality of the management of a company, it is germane to study their past history. If in a manager's previous associations, he has performed competently and to the benefit of the shareholders; or if conversely he has left a string of failed companies and a history of self-dealing in his wake, these are important to know. These factors do occupy a place in the "quality of management" equation.

Is this a Foolish point-of-view? My readings of the Brothers G is that they would pass on a company with a YPEG of .25 if the guy in charge is Carl Icahn, Donald Trump or Ronald Perlman. Is that accurate?

In the case of RAIN, I'm 100% bullish, by watching L.B. like a hawk.

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