Red Rock Resorts Inc - Class A

Red Rock Resorts, Inc. is a casino owner and operator focused on the Las Vegas locals market. Shares increased in the second quarter as construction-related disruption dissipated and investors grew more optimistic about the benefits of the company's recent resort investments. This should result in increased earnings and cash flow, allowing the company to continue investing in its properties while returning capital to shareholders. The company's balance sheet remains strong, with increased liquidity to support further capital investment and shareholder returns. We believe the stock remains attractive relative to what we believe the business can become over time.

Shares of Las Vegas Locals casino operator Red Rock Resorts, Inc. increased 22.4% in the second quarter and helped performance by 67 bps as construction disruption dissipated and investors looked ahead to the benefits of the company's recent investments in its resorts. This should result in increased earnings and cash flow and allow the company to continue to invest in its properties while returning capital to shareholders. The company's balance sheet remains strong with increased liquidity for further capital investment and shareholder returns. We believe the stock remains attractive compared to what we believe the business can become in time.

Red Rock Resorts, Inc. is a leading gaming growth company positioned in the highly attractive Las Vegas Locals market. The company has the real estate capacity to potentially double its portfolio in the coming years, and we find its current valuation – approximately 11 times 2027 estimated cash flow – compelling. This positions Red Rock to benefit from travel-related growth stories, particularly with the opening of its UAE resort in 2027, which could significantly enhance its market value.

Red Rock Resorts, Inc. is a casino owner and operator focused on the Las Vegas Locals market. Shares rose during the quarter as investors reacted positively to incremental visitation from new customers and accelerating spend-per-visit trends, despite concerns about a market slowdown. The company continues to report strong visitation and robust slot and table game play, along with improving activity from uncarded and non-rewards customers. Red Rock is regaining business at its flagship resort following some initial cannibalization from the opening of its Durango property, with management expecting a full recovery next year and trends already improving faster than anticipated.

Red Rock Resorts, Inc. is a casino owner and operator focused on the Las Vegas Locals market. The company is regaining business at its flagship resort following initial cannibalization from the opening of its Durango property. Management expects a full recovery next year, with trends improving faster than anticipated. The new property is generating robust returns, and performance across the company’s six core casinos has strengthened. Given the strength of the market, management continues to ramp up capital investment, with a decade of strong new projects that should drive a doubling of EBITDA over time.

Red Rock Resorts, Inc. has delivered impressive results at its latest new property. This success provided confidence to accelerate that property’s expansion and begin other new developments. The company is well-positioned to capitalize on growth opportunities in the Las Vegas locals gaming market, which is expected to continue benefiting from increasing demand and expansion efforts.

Red Rock Resorts, Inc. has been a strong performer in our portfolio, achieving a cumulative annualized return of 194.9% since our initial investment in 2016. We believe the company possesses a sustainable competitive advantage due to its unique market position and the high barriers to entry in the gaming industry. Our long-term investment strategy focuses on businesses like Red Rock that have predictable revenue streams and strong cash generation capabilities, which we expect will continue to drive superior returns over time.