Inside Wall Street
THESE OPERATORS HIT THE JACKPOT
Who's running the multimillion-dollar casinos owned by Native American groups? One outfit is Capital Gaming International (GDFI), the nation's biggest manager of Indian gambling contracts. It has deals with eight tribes that operate in Arizona, California, New York, Oregon, and Washington. Capital's success has attracted some very conservative investors, mainly Fidelity Investments, which has taken a nearly 15% stake.
As a result, its stock, which had languished between 21/2 and 4 since December, has risen to nearly 6. "With its experienced management, solid-core operations, and ability to expand," Capital should be one of the more intriguing gaming plays, says analyst Mark Manson of Donaldson, Lufkin & Jenrette Securities.
Soon, Capital will build a casino in Rhode Island for the Narragansett tribe, the first New England rival to Foxwoods in Connecticut, which monopolizes the local market. Capital has also just opened two riverboat casinos in New Orleans. They are part of a $208 million joint venture with Hemmeter Enterprises.
"The revenues from the riverboats and Indian casinos have exceeded analysts' expectations--and our own," says Capital Gaming Chairman Jack Davis, who spent 30 years as president of Resorts International. He was also president of Trump Taj Mahal in Atlantic City. Capital Gaming President Ed Tracy, who was CEO of the Trump casino when Davis was chairman, expects blockbuster earnings and revenues in 1996 and 1997, when "all our projects will be operating full blast." One insider sees earnings of 40 cents a share next year and $1 in 1997.BY GENE G. MARCIAL