As with the entire global business industry, gaming stock prices have plummeted because of the coronavirus. The casino ecosystem is at a virtual standstill due to the pandemic, and financial losses are projected to reach tens of billions of dollars, if not more. With trading already having been halted more than once recently due to extreme market weakness, the situation does have a bright side. It makes for a perfect buying opportunity and the chairman and CEO of Gaming and Leisure Properties (GLP), a casino-centric real estate investment trust, has taken full advantage of the downturn. Peter Carlino just picked up 80,000 shares in the company, currently worth about $2 million.
On February 21, GLP was trading at a six-month high of $50.30. Since then, it plunged to a low of $15.14 on March 18, recovering to $19.74 as of yesterday. Carlino, a former Penn National Gaming executive who helped facilitate the launch of GLP from the company in 2012, made his recent stake acquisitions from March 13 to March 16 as the share price continued to drop.
The purchases were confirmed by filings with the U.S. Securities and Exchange Commission (SEC). They were, according to Carlino, designed to bolster investor confidence in the company – not, of course, because it was a perfect money-making exercise. When the stock recovers, which it eventually will, Carlino stands to almost triple his investment if the price returns to pre-coronavirus levels.
The way Carlino spins it sounds more entertaining, though. The last time he purchased company stock was just over two years ago, and he said in a statement about his latest acquisition, “I am purchasing GLPI shares because they are deeply undervalued and do not reflect the Company’s strong balance sheet, liquidity, growing free cash flow and EBITDA [earnings before interest, taxes, depreciation, and amortization], its 14%+ dividend yield or its strong competitive position in the gaming REIT industry.”
GLP is behind 43 gaming properties in the U.S., owning the real estate tied to the venues. Most of these are part of Penn National’s portfolio, although a handful are owned by Eldorado Resorts and Jack Entertainment. Carlino added of GLP’s position in the market, “We believe our portfolio of gaming real estate includes tenants who are among the industry’s best operators and we maintain a terrific leadership team that has years of successful gaming industry knowledge and experience and is focused on prudently capitalizing on emerging opportunities.”
To be fair to Carlino, he isn’t the only one buying the dip and scooping up massive amounts of stock. Several other REITs, such as Simon Property Group and Boston Properties, have joined the buying exercises, even though some of these haven’t made stock purchases in years, if ever.
GLP got off to a good start this year, according to a company statement, and “exceeded its internal projections.” However, because of COVID-19, it’s going to step back and reconsider its goals and objectives for the rest of the year, explaining, “Given the current operating environment and the need to have a clearer understanding of the timeline and impact related to the interruption to property operations, the Company today is withdrawing the 2020 guidance it provided on February 20, 2020.”
