Ann: Trading Halt, page-92

Fund mgr Peter Cooper on Star.
AFR

Backing a fallen Star

The trick, of course, is to find the low-risk situations and avoid the turnarounds that never quite get back to their previous levels.

For Cooper, the numbers help explain why Star is a low-risk turnaround. “Star’s worth more than its share price, even without the licence, because of its property,” he says.

But stepping back from the current scandals engulfing the company and those other growth opportunities emerge.

One of Cooper’s favourite investment thematics is what he describes as the hubris-to-humility cycle. Hubris, he says, happens in many industries, including funds management, and it almost always ends badly. But the worse the problem, the quicker the shift to humility.

The scorching regulatory scrutiny that Star has been under in the last 12 months will likely see it emerge as one of the best-run casino companies in the world under new CEO Robbie Cooke, who Cooper says is “the perfect guy for that job”.

A clean-up Star could attract a bid from a cashed-up gambling giant or private equity group, as Crown Resorts did, is very real, Cooper argues.

But even if that doesn’t happen, Cooper believes the Star provides a smart way to play the post-pandemic tourism rebound that the NSW and Queensland governments will be desperate to see.

Cooper says the expertise his firm has built up in low-risk turnarounds, which is not a million miles away from private equity investing, is not well appreciated in the broader market. But in many ways it captures the multiple levels on which Cooper Investors hunts value under a formula Cooper and his long-time investment partner and friend Andrew Swan have been developing for most of their careers.