Six Flags-Management Play

[Davoso]

Six Flags (PKS) was recently taken over by Daniel Snyder, owner of the Redskins. Since his purchase he has brought over some excellent talent (Mark Shapiro, formerly of ESPN) to help the turnaround. I have been following since November when the stock was in the 7 range and purchased some in January for 8.75. It has been steadily climbing (now over 10) mostly because of the change in management and their philosophy.

This is a play on management as I don't think you can argue with the success of Snyder and Shapiro.

 

[dawgball]

I like management plays. Good luck with the trade.

 

[Davoso]

Copied from an article on Top Stocks in 2006 from Motley Fool from 1/18.

5. Six Flags will be one of the top stocks of 2006
With shares of Six Flags (NYSE: PKS) trading in the double digits for the first time in nearly four years, the market seems to be willing to give Dan Snyder and ESPN prodigy Mark Shapiro better than a fighting chance to turn the regional amusement-park operator around.

The stock may have tripled since bottoming out last year, but that doesn't mean the value of the company has tripled. This is an important distinction to make. Because the company's balance sheet is packing $2.1 billion in debt, the enterprise value of Six Flags has actually risen by just a little better than 50% to $3.5 billion. That's the beauty of leverage in a turnaround situation: The stock can double here in 2006, growing sixfold in two years, yet the company's enterprise value will have only doubled in that time.

Shapiro has his work cut out for him. Six Flags was able to grow attendance nicely in 2005, but now it's up to the new blood to keep the crowds coming back and giving them compelling reasons to spend more money once they're in.

 

[dawgball]

My opinion on a play like this where the management team is very well known and the changeover has been so public that much of their capacity to improve the company is already built into the price of the stock. As an investor, you have to calculate whether or not they will be able to improve the company's financials by more than what the street has determined.

If you were playing a quiet merger deal, this would be much easier (safer). I think if there are any hiccups early on, then confidence will falter and the stock plummets. But if you truly believe in the management team, then you could have a nice long-term winner.

Just my opinion.