Baron Generational Growth Fund on Red Rock Resorts, Inc.
Thesis
The Fund believes Red Rock Resorts remains attractively valued relative to the long-term potential of its Las Vegas locals casino business. Construction-related disruption has begun to dissipate, while recent resort investments should contribute to higher earnings and cash flow. That stronger cash generation should allow the company to continue investing in its properties while also returning capital to shareholders. The Fund also highlights Red Rock's strong balance sheet and increased liquidity as supporting additional investment and shareholder returns.
“We believe the stock remains attractive relative to what we believe the business can become over time.”
Key risks
- Recent resort investments may generate less incremental earnings and cash flow than expected.
- Operating results remain exposed to conditions in the Las Vegas locals market.