Monday, July 13, 2009

Long DUE and TTS

Don't get me wrong, I'm still a bear on this market over the next 6 to 12 months (heck - I expect a breakdown in the commodities complex sooner than that). It's just that I like the look of defensives at the moment.

We've already spoken about CEU and TCL (at the right price)...and I will get around to having a run through VIR that is part of my super portfolio...but today its DUE and TTS - both of which I bought today.

Time is short - so in brief:

I look upon it as a quality cashflow business valued on the basis of continuing operations - with upside from potential to win gaming business from Tabcorp.

The Victorian pokies business finishes up in a couple of years. It's a rapidly amortising annuity with a large kicker at maturity (there is no way that the State govt can get around not having to pay the $550m they owe to TTS). The current valuation places little value on this lump sum.

Dick McIlwain is one of the best managers in the country. A clear strategic thinker, he knows how to get the best out of the limited opportunities to bid for licenses. I'm happy to back him as Tatts seeks a booth at the track in Victoria.

Have a look at the chart - I like the stock at current levels. But I'd be buying with ears pinned back if it were to revisit its lows.

...having trouble with my internet hour has passed since I wrote this note, I should have known it right from the start...or something like that...gotta go pickup the kids

No comments:

Post a Comment