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No. of Recommendations: 6
GG team made MPEL into a best buy without any real metrics that favor such an assessment.

In your opinion. I actually have quite a few metrics that favor such an assessment, including a valuation relative to the replacement value of the company's assets and our outlook for Macau.

This thing is yet to show a profit and is deeply in debt.

I find it strange that you would hold a massive, early-stage real estate profit to the fire for not turning a profit. This is not a capital light website. And I'm not sure why you think the company is drowning in debt. It has more than $860mm in cash v. $1.7b in long-term debt, with its capita obligations for the opening of CoD all but satisfied. Further if you look at the maturies of that debt, the company can more than satisfy its maturities until 2012. Thus, we have a nice long time for the Macau situation to right itself. Melco, in fact, has the best-positioned balance of any of its Macau competition.

Now that travel restrictions are threatening to be back and that the Chinese govt is taking steps to limit gambling, is it off the BBN list?

I wrote this on the other board, but the answer is no. You are far too focused on the short-term. Further, the restrictions on gambling development in Macau favor entrenched operations.

This field will always be under attack from regulations wherever it is.

It will also always be profitable.

Going on to the issue of CGA...

I cannot believe that Tim says CGA is a buy below $12 and a hold at $13.5. How can investments whose share prices are totally based on the market whims be so tightly micromanaged.

I don't think it's worth our time to invest in small Chinese companies unless we can earn greater than 20% annualized returns. At less than $12 per share, CGA offers that potential. At $13.50 it does not.

There should at least be a difference of 30% in price between "Buy" and "Hold". I come up with the 30% number based on the volatility of the chinese market.

This seems arbitrary to me, and I have no idea what math you're doing to assess the volatility of the Chinese market. I also find it amazing that said math would lead you to such a nice round number.

The scorecard should do all the job.

Noted. We have a number of improvements we'd like to make to our scorecard. Unfortunately, it is hard coded and we have not been awarded the tech resources to get that changed. But we are in line for a site upgraded at which time that issue will be addressed.

GG has been riding the coattails of a massive recovery over the last 12 months.

I appreciate your not giving us credit for any market-beating stock picks. I'm just hoping this dumb luck can continue before I'm exposed for being the dolt I am.

Risk assessment needs to get a lot better.

Since I came here a year ago, we've gone from trailing the market to beating it by 11 percentage points. We've gone from deep in the red to solidly in the green. We've sold a number of stocks, two of which you continue to hammer me for selling, when they were basically bailed out by unpredictable government intervention. Just because you disagree about the nature of Melco's balance (without any evidence, I might add), you shouldn't make blanket statements about our risk assessment abilities here at GG.

Tim
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