Red Flagging Six Flags

In case you missed it, shares of Six Flags (PKS) have been on quite the run ever since the company put itself up for sale in August, rising from $5 to the current price tag of $7.22 each. There was no doubt that a sale would have been a welcomed event for investors. After all, the company hasn’t made money in years and has over $1 billion in debt (in fact, their debt load is more than 150% of the current market cap).

There is only one problem though. We learned this week that the company is no longer pursuing a sale. The reason? Nobody wants any part of Six Flags. That’s right, after four months of shopping the company, they didn’t get a single offer.

Don’t worry, though. Washington Redskins owner Dan Snyder is now Chairman of the Board and the company has a new CEO, Mark Shapiro. Recently CEO of Snyder’s investment firm, Shapiro, 35, was also formerly an executive at ESPN. What does he know about running a theme park company? I’d presume not much, which can’t be a good sign for investors in PKS.

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6 Thoughts on “Red Flagging Six Flags

  1. Jack Miller on December 16, 2005 at 7:23 PM said:

    It would be interesting to visit the history of relative performance of theme parks. It seems intuitive that, during the second half of an economic upturn, theme parks might do well. Consumers who now shy away from refinancing their home to buy the big boat or vacation home may enjoy an extra vacation. Wage increases should be very strong in the boom years ahead, leaving consumers with extra disposable income. Hotel room rates and airline fares are soaring. Much of the increase relates to growth in business travel but, in a strong economy, the price of admission to Six Flags or Disney World may not look so dear.

    Without taking a look at a stock chart, my first thought is that it has been a long time since these stocks have done well. The demographics might suggest that their time is near (worth checking anyway). I am a 55 year old baby boomer. I suddenly find that I have 10 great nieces and nephews and a granddaughter on the way. I look forward to watching “my little girl” while she enjoys that first thrill of visiting Disney World.

  2. Chad Brand on December 17, 2005 at 9:10 AM said:

    I also think there is a secular shift away from theme parks. With the Internet taking off and all of these new video game consoles, I tend to think there are fewer kids interested in going to Six Flags now, as opposed to 10 years ago.

  3. Jack Miller on December 20, 2005 at 4:12 PM said:

    Your post raised my interest level. When the population cohorts are heavy with teen age males, theme park attendance rises strongly.

    Have you looked at Cedar Fair (FUN)?

    PKS and FUN are perhaps the best major pure plays. The “big boys”, Disney, Universal and BUD control the big destination parks. The regional parks actually see attendance rise when gas prices are high.

  4. Chad Brand on December 20, 2005 at 4:33 PM said:

    I have not looked at it, given my view of a shift away from theme parks. Despite population growth, PKS 2004 revenue was nearly identical to year 2000 levels. If FUN has a better balance sheet than PKS, than it may be worth a look if you want to play the theme park game to the long side.

  5. NO DooDahs on December 29, 2005 at 2:57 PM said:

    Check out the tax treatment for FUN dividends. It’s an MLP not a corp. Adjust for that before looking at yield as a component of total return. They also have a DRIP.

    http://finance.yahoo.com/q/ta?s=FUN&t=5y&l=off&z=l&q=c&p=&a=&c=

    http://finance.yahoo.com/q/ta?s=FUN&t=3m&l=off&z=l&q=c&p=&a=&c=

    Doesn’t look like it’s going anywhere for a while, or below 28.

    Much better balance sheet than PKS. DE for FUN is less than 1, and it’s improving over the last few years. ROE consistently high, growing the book value nicely.

    Not a fan of PKS. Not long FUN, either, but I like it, it’s just not screamingly cheap enough for me.

  6. amatteo on May 13, 2010 at 5:31 PM said:

    A lot has changed! Did you guys hear about this?

    Six Flags Entertainment Corp., which recently exited from bankruptcy court protection, said amusement park veteran Alexander Weber Jr. has been named president and interim chief executive of the company, The Wall Street Journal reported.

    Source:

    http://investors.sixflags.com/phoenix.zhtml?c=61629&p=irol-govBoard

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