Opportunity or Caution? (LVS)
I often listen to CNBC on XM Radio (XMSR) while driving, and this morning I heard Sheldon Abelson, CEO of Las Vegas Sands (LVS -- click to register for free RT streaming quote), interviewed by Mark Haines on the floor of the NYSE. They were talking about the growth of gambling in Macao, and the fact that it currently rivals Vegas and will very shortly overtake it in gambling volume.
I am not an LVS owner, and I actually don't own any gambling stocks at the moment (though I do think it's an attractive growth industry in general), but Abelson had a quote that I think pretty well sums up the attitude of the successful growth investor.
When asked whether he was concerned about the political risks (uncertain legal environment, property rights, etc.) of investing in Chinese-controlled Macao, he responded that the folks who were too cautious about this "will be waiting at the railroad station when their ship comes in."
LVS looks pretty expensive on first glance today, but I generally like that kind of attitude in a CEO -- and it's especially impressive in an experienced, 72-year-old manager. Those of us who are looking for growth companies want our managers to pursue growth, not to fear opportunity.
This is much the same thing we have to tell ourselves when we look to invest in biotech -- the managers of Vertex (VRTX), Myriad Genetics (MYGN), and Exelixis (EXEL) are all essentially putting their companies on the line to aggressively pursue novel therapies that carry enormous risks. We depend on them to pursue opportunity, not to manage with a fear of losing.
And Akamai (AKAM), Google (GOOG), Click Commerce (CKCM) and the other technology-based growth companies I'm involved in ... they also need to look to the future and build their capabilities to handle the growth that is possible, not the obstacles that may be feared ... whether it's RFID for CKCM, or expanded international online advertising for GOOG, or the capability of supporting more and more streaming video for AKAM. They can't afford to hedge their bets too much, or someone else will be waving to them from the rail of the ship, laughing, as they sit at the railway station looking for a safer route.
Of course, every company has to manage their risks to some degree -- and part of finding promising growth companies and small caps is picking the ones that you think have placed the right bets, and diversifying so that you can afford to pick a few stinkers (I've certainly done that).
And beyond just diversifying with a basket of growing companies, I certainly have built up my portfolio positions in some larger and more stable companies over the past year as well -- Cemex (CX), Rayonier (RYN), Berkshire Hathaway (BRKB), Markel (MKL), and UBS (UBS), for example, are not out on the edge looking for the next toehold the way my smaller, aggressive growth holdings are.
But without the potentially dramatic returns that can be achieved by pushing the envelope and taking risks, my portfolio would be far smaller today and would have significantly less long term potential. I applaud Mr. Abelson for pursuing dramatic growth in Macao and trying to exploit the window of opportunity that LVS has been given, even if I'm not joining him on this ride.
I am not an LVS owner, and I actually don't own any gambling stocks at the moment (though I do think it's an attractive growth industry in general), but Abelson had a quote that I think pretty well sums up the attitude of the successful growth investor.
When asked whether he was concerned about the political risks (uncertain legal environment, property rights, etc.) of investing in Chinese-controlled Macao, he responded that the folks who were too cautious about this "will be waiting at the railroad station when their ship comes in."
LVS looks pretty expensive on first glance today, but I generally like that kind of attitude in a CEO -- and it's especially impressive in an experienced, 72-year-old manager. Those of us who are looking for growth companies want our managers to pursue growth, not to fear opportunity.
This is much the same thing we have to tell ourselves when we look to invest in biotech -- the managers of Vertex (VRTX), Myriad Genetics (MYGN), and Exelixis (EXEL) are all essentially putting their companies on the line to aggressively pursue novel therapies that carry enormous risks. We depend on them to pursue opportunity, not to manage with a fear of losing.
And Akamai (AKAM), Google (GOOG), Click Commerce (CKCM) and the other technology-based growth companies I'm involved in ... they also need to look to the future and build their capabilities to handle the growth that is possible, not the obstacles that may be feared ... whether it's RFID for CKCM, or expanded international online advertising for GOOG, or the capability of supporting more and more streaming video for AKAM. They can't afford to hedge their bets too much, or someone else will be waving to them from the rail of the ship, laughing, as they sit at the railway station looking for a safer route.
Of course, every company has to manage their risks to some degree -- and part of finding promising growth companies and small caps is picking the ones that you think have placed the right bets, and diversifying so that you can afford to pick a few stinkers (I've certainly done that).
And beyond just diversifying with a basket of growing companies, I certainly have built up my portfolio positions in some larger and more stable companies over the past year as well -- Cemex (CX), Rayonier (RYN), Berkshire Hathaway (BRKB), Markel (MKL), and UBS (UBS), for example, are not out on the edge looking for the next toehold the way my smaller, aggressive growth holdings are.
But without the potentially dramatic returns that can be achieved by pushing the envelope and taking risks, my portfolio would be far smaller today and would have significantly less long term potential. I applaud Mr. Abelson for pursuing dramatic growth in Macao and trying to exploit the window of opportunity that LVS has been given, even if I'm not joining him on this ride.
Labels: LVS
This article posted by One Guy @ 3/15/2006 10:19:00 AM 0 comments
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