Cedar Fair "FUN" Stock

I have used this recent downturn in the market to enter the stock market for the first time. I have been extremely cautious as no one knows how this will affect industries around the world, but I was curious what people generally think of FUN these days. It was trading for as low as $13 last week, but has typically traded for $45-$65 in recent years.

What's all of your opinions on the stock and how you see things playing out as we recover from this?

My opinion is that you bought too soon. I doubt it's bottomed out yet.

If you're looking long term, it's a great opportunity... It'll eventually recover, but could be 30 months, could be 30 years...

I also agree with Jeff that it hasn't bottomed out yet...

Lot of road bumps ahead, every one will likely send the stock down again.

1. Q1 earnings will be down significantly . Q2 could be wiped out almost completely.
2. The Dividend (which makes FUN so attractive) will have to be slashed or gutted completely. They will need all the cash on hand they can to service debt and also to get the parks operating again.
3. If they need to take a loan from the stimulus, based on the initial draft they might be barred from giving a dividend for a year. ( not sure if this applies to LPs and a company this size, but the threat is there)
4. The above are CF specific, but the price will also go up or down with the broader markets. Nobody knows what that will do; but after the stimulus effect wears off I don’t see much good news coming for the markets.
5. Worst case I feel is it things start to open back up too soon (like the president seems to want ) and infections spike again. After spending money to open parks and hire they are forced to shut it down again, actually loosing more money than if they were to stay closed.

I feel the only safe time to buy is once we see the endgame (either vaccine or worse) and we know for near certain they can get back to business as usual. Even then a buyout is possible since the market cap is shot.

For what it’s worth Zimmerman bought a bunch around $25 a unit about 2 weeks back. This was hopefully on his radar and they already had a good plan to weather this.

My biggest hope is that not too many CF full timers have a lot wrapped up in their retirement funds in FUN. Could take years to get it back, if at all.

Worst case part b. We find when the guard is let down anywhere close to the congregations of stadiums, arenas, amusement parks etc. cases spike because we do not have acquired herd immunity + vaccine, so we are looking at 12-18 months of closure until a vaccine. 18 months likely wipes out 2021 as well. That also presumes our first tries at a vaccine are successful, that isn't always the case.

Things can always get worse.

3.28 million jobless claims last week. The previous weekly record was 695K in October of 1982.

Cedar Fair is going to take a huge hit on school revenue, it will be non existent for 2020.

That makes up a huge chunk of the revenue for the month of May.

Not sure how accurate this is but i thought I would post it anyways...

https://www.yahoo.com/finance/news/bear-day-cedar-fair-fun-100010225.html

I barely got past the first paragraph because the author claims CF only owns 5 parks.

causewaycruiser said:

Not sure how accurate this is but i thought I would post it anyways...

https://www.yahoo.com/finance/news/bear-day-cedar-fair-fun-100010225.html

The notion CF had bad earnings running into the season is nonsense. CF reported 2/13 & the stock actually went up slightly on the report. CF stock did not start going down until 2/21. Investors don't wait a week if they think you have bad earnings to hit your stock. Q3 earnings on 11/6 the stock went up slightly & help that same point till Feb.

"The company says it is facing challenges related to its base business. They are seeing soft organic revenue trends and increasing costs due to minimum and market wages. It seems as if people aren’t going to parks and it becoming more expensive to run them."

None of this was actually said & his interpretation is literally opposite to the conf call.

Guarantee this guy is short CF & when it popped the other week from $13 to $25 he got murdered in the short squeeze. The reason the theme park stocks move 20% in one day several times lately on any hint of semi-good news is all the shorts covering their backsides. CF moved over 20% up at the open today b/c it was reported by some news sources, "infections rate seemed to be slowing." The parks aren't opening & will not before 5 or 6 weeks best case scenario. A drastic move is not warranted, but happened b/c of shorts.

FUN isn't a company in crisis when it's open. I have concerns about it, sure, but if it could resume normal operation tomorrow, it would be fine.

I will be buying some FUN stock in the next week or so. I don't see any reason why I won't at least triple my money in a year or two, and that's a no brainer to me.

I'm also considering playing some Russian roulette and buying some JCPenney stock. If this pandemic breaks them, sucks to be me. If they can bail the water out of their ship and get it back on course in the the coming years, there's huge profit per share to be made.

If FUN continues to pay almost $4/share dividend, I figure 120 shares will pay for Platinum Passes for me and the boy (with Fun Pix and drinks on one pass) through Canada’s Wonderland each year... So I could essentially buy our own Tickets of a Lifetime right now for about $2,200.

Once we come out of this as a nation and a world I have confidence that Cedar Fair will be just fine. They've had good leadership at the helm for several years now and should be able to weather this better than many.

I purchased some FUN stock on Monday, it's too cheap right now to pass on, and when the world opens back up, and Cedar Fair gets rolling, the investment will be well worth it.

There's no universe where they pay the dividend absent of revenue.

I know I'm coming to this very late but the biggest issue with investing in Cedar Fair is that it is not a corporation, what you're buying is not stock, and the quarterly payments are not dividends. Almost nothing that applies to investing in stocks apply to it. Cedar Fair is a publicly traded master limited partnership, what you're buying are partnership units (not shares of stock), and the quarterly payments are partnership distributions, not dividends.

Think that's just a matter of different terms? Nope. Come April when you work on your tax return, you'll find things far more complex. First off, you'll receive a K-1 which details your share as a partner of Cedar Fair's income and expenses. You pay taxes on your share of FUN's profit, not on the distributions (which are considered a return of capital), which may be more or less than the amount of the distributions. But the federal part is the easy part (any decent tax software will handle it). It's the states that cause the problems as you need to file non-resident state tax returns in every state where Cedar Fair does business and which requires individual partners to file. I was invested in FUN until about 10 years ago and finally sold due to the state filing requirements. At the time, only five states needed to be filed: Ohio, California, Pennsylvania, Missouri, and Minnesota but fortunately I was below the minimum filing requirements for MO and MN so only had to do three (plus my home state but that also killed off my ability to e-file my home state). Also, you won't receive the K-1 until early March so forget about filing early to get a refund quickly. You'll be luck to be filing by 4/15.

IMHO, unless you're investing large amounts in FUN, it's an investment best left to the professionals as otherwise, unless you're a tax expert who can prepare your tax returns on paper, the added costs of filing (either by paying a tax preparer or by buying additional states for tax software) is likely to far exceed any profit you make off of Cedar Fair.

The only practical difference for regular Joes is that you can't file until you have the K-1, which has to be filed by March 15. It's not that big of a deal.

Filing has been made easier over the years as most of the information can be imported directly into a software like Turbo Tax. Even prior to then it wasn't TERRIBLY complicated, though it is much easier now.

I'd also argue that if you are in a big hurry to get your tax refund back each year you might have more significant issues aside from when the K-1 is sent out.

I spent some time working in Investor Relations at Cedar Fair and that was 90% of my phone calls. Everyone NEEDED to file their taxes in January and just couldn't wait until March for their K-1 even though they went through the same thing the previous year, and the year before that, and so on.