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Boyd Jumps Most in 7 Months After Elliott Discloses Holding (2)

March 11, 2014

Boyd Gaming Corp. (BYD:US), the operator of casinos and gambling properties from Las Vegas to Atlantic City, gained the most in more than seven months after activist investor Elliott Associates LP disclosed a 7 percent stake.

Shares of the Las Vegas-based company rose 16 percent to $13.64 at 1:13 p.m. in New York after earlier climbing 20 percent for the biggest intraday gain since July 30 last year.

There’s speculation that Elliott may seek a higher stock price by pressing Boyd management to adopt a real estate investment trust structure, David Bain, an analyst with Sterne, Agee & Leach Inc., said in a research note today. The Boyd family owns about 30 percent of the company and would need to sell down its stake for a REIT to be created, said Bain, who has a neutral rating on the shares, the equivalent of hold.

The New York-based hedge fund has taken positions in distressed companies and pressured technology providers including NetApp Inc., BMC Software Inc. and Compuware Corp. to boost shareholder value. Boyd posted a loss in the fourth quarter earlier this month after reporting a surprise loss in the previous period.

When asked last week about the opportunities REITs can create in the casino industry, Boyd Chief Financial Officer Josh Hirsberg said he couldn’t comment specifically.

‘Shareholder Value’

“We’re always interested in growing the company and looking for initiatives to create shareholder value,” Hirsberg said on a March 5 conference call, the day Boyd reported earnings.

Elliott, Elliott International and EICA beneficially own about 4.99 percent of Boyd, according to a filing (BYD:US) posted yesterday after the markets closed. The parties also have economic exposure to about 2.05 percent of Boyd shares, the filing said.

Elliott may meet with management and other shareholders and, among other things, may “formulate plans or proposals regarding the issuer,” it said in the filing.

A phone call and e-mails to Elliott’s offices in New York seeking comment about whether the fund has asked Boyd to consider a REIT structure, weren’t immediately returned.

David Strow, a spokesman for Boyd, said today that Elliott’s filing had been noted.

“We always appreciate new investments in the company,” he said.

REITs pay investors pretax earnings as dividends. Penn National Gaming Inc., an operator of casinos and racetracks, spun off Gaming and Leisure Properties Inc. (GLPI:US), a REIT that owns its casinos, in November. Penn National, a management company, runs the company’s businesses.

To contact the reporter on this story: Christopher Palmeri in Los Angeles at

To contact the editors responsible for this story: Cecile Daurat at Ben Livesey, James Callan

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