Thursday, April 10, 2008

Why did you buy that stock ? [Sky City Entertainment]

I'm going to kick off a series of articles about what drew me to the 15 stocks that I hold in my portfolio.

While it is interesting to know what different investors hold in their stock portfolio, it is clearly more intriguing as to why they made the decision to buy an individual stock in the first place.

Let me begin with the largest stock holding in my top draw, the often much maligned Sky City Entertainment[SKC.NZ] the Casino, Hotel and Cinema operator.

I have held this company since buying in 2002 and it has cost me just under $2 a share when the very generous dividend is accounted for.

Why did you buy that stock?

Why did you buy that stock? [Freightways Ltd]
Why did you buy that stock? [Kiwi Income Property Trust]
Why did you buy that stock? [Hallenstein Glasson]
Why did you buy that stock? [Briscoe Group]
Why did you buy that stock? [Fisher & Paykel Healthcare]
Why did you buy that stock? [Pumpkin Patch Ltd]
Why did you buy that stock? [Ryman Healthcare]
Why did you buy that stock? [Michael Hill International]
Why did you buy that stock? [Mainfreight]
Why did you buy that stock? [The Warehouse Group]
Why did you buy that stock? [Goodman Fielder]
Why did you buy that stock? [Auckland Airport]
Why did you buy that stock? [Sky City Entertainment]

Discuss this stock @ Shareinvestor.net.nz

The main reason I purchased is the monopoly position that it holds in all the markets it operates in. The constant cash flow that this sort of business provides, even during tough economic conditions, is another quality that attracted my hard earned cash.

Initially, before I plunked my shekels down, I visited a couple of the company's casinos, talked to some middle management and harassed employees on the shop floor to see what sort of business it was.

Naturally there was both good and bad feedback but mostly it was positive stuff.

I made a few more visits to the company's main gaming floor in Auckland, New Zealand and after reading the prerequisite company financials, was convinced to put about NZ$135,000.00 on the table.

I came to the conclusion from my interactions with Sky City, that it was a pretty easy business to understand, a principle that Warren Buffett uses to gauge a possible company purchase, and there wasn't too much that management could do wrong with such a basic business. I was wrong about that, but that is another story for another time-a Buffett principle that escaped me at the time, look carefully at management when buying!

Would I still purchase Sky City today?

A good question stockmarket investors should all ask of ourselves about stocks in our portfolios.

While there is much that has gone wrong with the management of this company, some very bad decisions have clearly been made, cash is still flowing into the tills, the company rides out downturns in the economy well, and profit is there, albeit slowed considerably, I would indeed purchase at anything below 2 bucks.

Sky City @ Share Investor

Sky City Entertainment 2009 Interim Result Review

Sky City Entertainment 2009 Interim Result Preamble
2008 Sky City profit analysis
Sky City Entertainment 2008 Full Year profit results , NZX release, 2008 full year presentation, result briefing webcast, financial statements
Sky City 2008 profit preamble
Sky City outlines a clear future plan
As recession bites Sky City bites back
Sky City Assets: Buy, sell and hold
Why did you buy that stock? [Sky City Entertainment]
Sky City Share Volumes set tongues wagging
Sky City half year exceptional on cost cutting
NZX Press release: Sky City profit to HY end Dec 2007
Sky City Cinemas no Blockbuster
Sky City Entertainment share price drop
New Broom set to sweep
Sky City Management: Blind, deaf and numb
Sky City sale could be off
Opposition to takeover
Premium for control
Sky City receives takeover bid
Sky City Casino Full Year Profit to June 30 2007
Setting the record straight
Sky City CEO resigns
Sky City Casino: Under performing
Sky City Casino 2007 HY Profit(analysis)
Sky City Casino 2007 HY Profit

Discuss this stock @ Shareinvestor.net.nz


Related Links

Sky City Financial Data


Related Amazon Reading

Double or Nothing: How Two Friends Risked It All to Buy One of Las Vegas' Legendary Casinos

Double or Nothing: How Two Friends Risked It All to Buy One of Las Vegas' Legendary Casinos by Tom Breitling
Buy new: $17.72 / Used from: $1.40
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