Inside Wall Street
THREE HAWKS ARE EYEING JACKPOT
Casino stocks haven't been on a winning streak this year--except for a few that are deemed takeover bait. One such is Jackpot Enterprises (J), some investors insist. Jackpot's appeal: It has cash--and little debt. Analysts put the cash hoard at $33 million, or $3.50 a share.
"That's part of what has been catching the hawkish eye of players who want to get into the Nevada scene," says Chuck DiRocco, editor of Gaming Today, a weekly Las Vegas trade paper. He thinks Carl Icahn, Ron Perelman, and entertainment mogul Merv Griffin are on the prowl. In October, an unknown group bought a block of 224,000 shares, or 2.4% of Jackpot's shares outstanding, at around 9. The stock is now at 111/2.
Perelman has applied for a Nevada gaming license--on top of the gaming license he has obtained for Atlantic City. "His application notes that he wants to come in as a slots operator," says DiRocco, but that doesn't preclude other casino operations.
Much of Jackpot's cash stash comes from operating and servicing slot machines. Jackpot runs 4,700 such devices at retail outlets throughout Nevada. "These slots are a cash cow," says DiRocco. For Griffin, chairman of Griffin Gaming & Entertainment (formerly Resorts International), Jackpot would be a good fit, analysts say, with Merv Griffin's Resorts Casino Hotel in Atlantic City. Griffin also has privately owned hotels in Arizona, California, Florida, and New Mexico. Jackpot owns four small casinos.
Two things could happen as a result of Jackpot's cash flow, says one big investor: Jackpot, now at 11 1/2 a share and likely to earn 84 cents in the year ending June 30, 1996, "will either be acquired at 18 to 20, or it will use its cash to make a major acquisition."
Icahn and Perelman declined comment. Griffin's spokesman wasn't available.By GENE G. MARCIAL