Any Thoughts on Shorting SIX?

Discussion in 'Research Center' started by gugaplex, Jun 24, 2007.

  1. gugaplex

    gugaplex Member Original Member

    Joined:
    Jul 1, 2006
    Messages:
    421
    Likes Received:
    0
    Trophy Points:
    16
    Occupation:
    Investor
    Location:
    USA
    Home Page:
    Six Flags (SIX) is a serial money loser. With recent news of the lady's feet being severed in Kentucky during the ONLY positive quarter the company experiences each year, it seems that earnings will suffer even more. However, there is a HUGE short interest of 38%, so you could be playing with fire.

    I am thinking of shorting SIX, any thoughts?
     
  2. Grimreaper

    Grimreaper Active Member Original Member

    Joined:
    Jun 11, 2005
    Messages:
    5,161
    Likes Received:
    0
    Trophy Points:
    36
    Maybe wait until it trades to 6? :? :lol: Actually, all it needs to do is take out the recent trend high ov 6.55...but it'll probly rally to a duble top wit da seckond peak slightly higher than da 5.80 high. Look fer tumblin Earl to rally da indicies into the season where most mawket tops are created...early to mid Julie. Then we'll see da standard drop into Oct. How fer she drops depends on whether or not da VIX takes out 9.50 ov course. If it do da long term downtrend begins. If not I'm wreckin da Naz will only drop to 2100 er so. :wink:
     
  3. gugaplex

    gugaplex Member Original Member

    Joined:
    Jul 1, 2006
    Messages:
    421
    Likes Received:
    0
    Trophy Points:
    16
    Occupation:
    Investor
    Location:
    USA
    Home Page:
    Sold SIX Short Today @ $6.15

    In conjunction with my growing theme on protection from a correction, I decided to sell Six Flags short today at $6.15. The recent news for the company is not too bright after a 13 year old girl had her feet severed on a Six Flags ride in Kentucky.

    Taking a look at the quarterly net income for SIX, you will see that the company is only profitable in the period ending in September. Therefore, with the recent negative news, one would expect that earnings for this one and only profitable quarter will be relatively weak. I love roller-coasters, but one thing that is always in the back of my head when riding one is whether or not I am going to go flying off the track, etc. I'm not sure that people are going to be quite as enthusiastic about handing over $40-50 to be worried all-day (heck, they can just watch the stock market instead).

    Another reason I am negative on SIX is due to their financial health. The company has Current Assets (cash, inventory, etc.) of $133 million, and Current Liabilities (Accounts Payable and Short-Term Debt Payments) of $291 million. This is bad news for a company trying to stay afloat.

    The final factor that I used to short SIX is the fact that there really isn't any future growth for theme parks. What catalyst will pop-up that will cause people to increase their visits to the parks? SIX can open more attractions and parks, but then they'll just lose MORE money. If SIX can't be profitable in a growing economy , then when will they have positive net income?

    A word of caution, SIX has a large short interest in the stock (28%). However, I do not see much of a reason for the shorts to cover. Even if the economy continues to grow, I seriously doubt SIX will ever be profitable. When the economy starts to slow, look out below!
     
  4. Im Not Warren Buffett

    Im Not Warren Buffett Active Member Original Member

    Joined:
    Nov 26, 2005
    Messages:
    3,190
    Likes Received:
    0
    Trophy Points:
    36
    That pretty much sums it up for me, I don't see any way this company is going to be profitable any time soon.
    As a little local intel, I live about 30-40 minutes from a Six Flags and my father took my younger brother there a week or so ago... he said the place was awful, a good number of the rides were shut down, and the tickets cost as much as WDW with lines to match. He put it as a "never going again" type of experience.

    And look at that balance sheet... what a delicious financial situation. This one has been on the sell block since before they started severing limbs, and there is no fundamental reason SIX should bounce.
     
  5. gugaplex

    gugaplex Member Original Member

    Joined:
    Jul 1, 2006
    Messages:
    421
    Likes Received:
    0
    Trophy Points:
    16
    Occupation:
    Investor
    Location:
    USA
    Home Page:
    Interesting quote from press release:

    "The family's statement said no one from the theme park had contacted them since the accident, as park representatives had told reporters. "At no time has any representative of the theme park been in touch with members of the family," the statement said.

    Wendy Goldberg, a spokeswoman for Six Flags in New York, disputed that account. Goldberg said two representatives from Kentucky Kingdom went to the hospital following the accident and stayed for "some time" before the Lasitter family asked them to leave. She would not say who the representatives were."

    http://biz.yahoo.com/ap/070626/amusemen ... .html?.v=2
     
  6. gugaplex

    gugaplex Member Original Member

    Joined:
    Jul 1, 2006
    Messages:
    421
    Likes Received:
    0
    Trophy Points:
    16
    Occupation:
    Investor
    Location:
    USA
    Home Page:
    May gap down tomorrow. I suggest shortin SIX into the mid $5's. Wait for a dead-cat bounce and short again...
     
  7. gugaplex

    gugaplex Member Original Member

    Joined:
    Jul 1, 2006
    Messages:
    421
    Likes Received:
    0
    Trophy Points:
    16
    Occupation:
    Investor
    Location:
    USA
    Home Page:
    Damn! SIX is trading at $3.90 today. I should have held my short in this one. Luckily I made a nice chunk o' change on SIX. I learned a valuable lesson with this stock.

    I would cover if short, and wait for a rebound to short again...
     
  8. akh098

    akh098 Active Member Original Member

    Joined:
    Jan 26, 2006
    Messages:
    1,179
    Likes Received:
    0
    Trophy Points:
    36
    Occupation:
    Student
    Location:
    New Delhi, India
    Great ! Superb analysis giving profits.
     
  9. Monte

    Monte New Member Original Member

    Joined:
    Jan 21, 2006
    Messages:
    29
    Likes Received:
    0
    Trophy Points:
    1
    Location:
    Estonia
    LHV target 7$, time horizon 1-2 years.