Street praises Pinnacle’s pluck

Wall Street was singing the praises of Pinnacle Entertainment Chief Executive Officer Anthony Sanfilippo long before the company decided to spend $95 million to buy into a resort development in Vietnam.

Last week's surprising announcement gave the investment community even more reason to be complimentary.

It wasn't lost on analysts that midsized, Las Vegas-based Pinnacle, which operates properties primarily in U.S. riverboat gaming markets, was stepping into the Asian casino arena that has been dominated by the industry's largest players.

"Investors should give the company credit for making a bold investment into a growth market," Credit Suisse gaming analyst Joel Simkins said. "There is no rule set in stone in our view that every Asian development project must go to Las Vegas Sands Corp., Wynn Resorts (Ltd.) or MGM Resorts International."

The move was the latest stamp Sanfilippo has put on the company in 14 months as CEO.

His initial goal was to reset Pinnacle's culture with a focus on operating the company's signature casinos in Louisiana, St. Louis, Indiana and Boomtown in Reno.

Noncore assets, including casinos in Argentina and corporate aircraft, were sold. Pinnacle consolidated its three corporate locations in Las Vegas into one building off the Las Vegas Beltway behind Spanish Hills.

Two weeks into the job, Sanfilippo canceled plans for a second casino in Lake Charles, La.

He did convince the company's board to increase the investment in a now $357 million hotel-casino under development in Baton Rouge, La., and to spend $45 million to acquire the River Downs Racetrack in Cincinnati. The location will open a casino once Ohio allows for slot machinelike video lottery terminals.

Recently, Sanfilippo ended a simmering legal feud with former company CEO Dan Lee, allowing the flagship L'Auberge du Lac resort in Lake Charles to coexist with Lee's Mojito Pointe project that he plans to develop on an adjacent site.

Settling the hostilities with Lee wasn't as challenging as it might have seemed. Sanfilippo had never met Lee, who is considered the visionary behind Pinnacle's stellar growth a few years ago. The two agreed to get together for coffee on two straight mornings at Sambalatte in Boca Park to iron out any differences.

For Sanfilippo, it was a simple matter. Lake Charles Port officials want Lee to build Mojito Pointe and it was in Pinnacle's best interest to have some participation in the property's layout and site development.

"The conclusion worked out for everyone involved," he said.

Sanfilippo had an active year, "accomplishing a lot of stuff in a real short order," he said.

Sanfilippo spent two decades as an executive with Harrah's Entertainment before the company became Caesars Entertainment Corp. Prior to joining Pinnacle, he was CEO of gaming technology provider MultiMedia Games.

For the moment, Wall Street is sold on Pinnacle.

Before the Vietnam deal, one analyst upgraded his view of the company from "neutral" to "outperform."

Following the deal to acquire 26 percent of a Canadian company developing the Ho Tram Strip in Southern Vietnam, Macquarie Securities gaming analyst Chad Beynon said Pinnacle is willing to take calculated risks.

"Management is continually thinking outside of the box for ways to maximize shareholder value and efficiently use free cash flow to grow the company," Beynon said. "Pinnacle will be the only regional gaming company to have exposure to the Asian gaming market."

Sanfilippo said last week that operating Pinnacle's casinos more efficiently was his primary focus coming in. He's also not opposed to growing the casino operator's footprint.

"We look for the right opportunity, but we're not rushing out to make any deals," Sanfilippo said.

A recent alliance with Wynn Resorts, he said, will help Pinnacle get a leg up on the regional gaming competition. Pinnacle customers participating in the top tier of the company's "mychoice" rewards program can earn multiday stays at Wynn Las Vegas or Encore. Customers can also earn the use of a new Mercedes-Benz for two years and can also be awarded stock in the company.

"We needed a something that sets us apart from the competition," Sanfilippo said.

It will be interesting to see what the next year brings Pinnacle's way.

Howard Stutz's Inside Gaming column appears Sundays. He can be reached at hstutz@reviewjournal.com or 702-477-3871. He blogs at lvrj.com/blogs/stutz. Follow @howardstutz on Twitter.