Betting on “Asia’s Las Vegas” — and Cashing in on Quick 53% Gains in Mongolia

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

Your bet on the Mongolian miracle Ivanhoe Mines, Ltd. (IVN) soared more than 10%. With the options up 53%, sell half of your options here to lock in some quick profits in just two weeks.

India’s ICICI Bank (IBN) also soared another 9.5%, and your options now are up 178%. You already booked 109% gains in this position last week, so hold these for now. iShares MSCI Thailand Investable Market Index Fund (THD) also had a strong week, jumping 7.26%. Note that I have raised your stops on many of your picks.

With your Global Bull Market Alert portfolio bursting at the seams with a record 11 picks, it’d be tempting to sell some of your holdings to lock in some profits. Trouble is, I’m still bullish on all of our positions between now and the end of the year. And I like to strike while the iron is hot…

Like your holding in Chinese Internet portal SINA Corporation (SINA), this week’s Global Bull Market Alert pick focuses on yet another China-related theme through Melco Crown Entertainment Limited (MPEL). Melco is an operator of casino gaming and entertainment resort facilities focused on the fast-growing Macau market — the only Chinese city in which casinos are legal.

Macau actually has become the world’s biggest gambling hub, having overtaken Las Vegas in terms of revenues back in 2006. While Las Vegas is struggling to get back on its feet, Macau’s gaming industry has come roaring back. Macau-wide casino gambling revenue jumped 59% in the first 10 months of this year to 152 billion patacas ($19 billion) from a year earlier. And revenues only are expected to continue climbing as the Macau-China border gate is set to double its capacity.

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Melco is one of six licensed Macau casino operators. But unlike its other competitors, 100% of Melco Crown’s revenues are derived from Macau. While U.S. giants Las Vegas Sands (LVS) and Wynn Resorts (WYNN) may be better operators, Melco is controlled by Lawrence Ho, a son of local tycoon Stanley Ho, and part of one of the region’s most powerful families. That makes Melco a local player who knows the rules of the game in a rough-and-tumble business environment.

Melco recently posted a profit in Q3, handily topping expectations. Revenue jumped 45.4% to $727 million, much better than consensus estimates of $672.9 million. Its flagship “City of Dreams” casino generated a profit of $114.9 million, compared with $46.6 million in the year prior. Citigroup analyst Anil Daswani maintains Melco Crown Entertainment (MPEL) as his top Macao stock, with a “Buy” rating and a $7.50 price target. I think it can go much higher.

The recent pullback in the stock makes today a good time to buy Melco Crown Entertainment Limited (MPEL) at market. Place your stop at $5.25. For even bigger potential gains, I recommend the April $7.00 call options (MPEL110416C00007000).

Melco’s “City of Dreams”

Portfolio Update

Credicorp Ltd. (BAP) rose 0.6% this past week, after hitting a record high of $127.12. Peru’s currency, the sol, had its biggest weekly rise since August, as the Federal Reserve’s measures to boost the U.S. economy lifted commodity prices and fueled demand for higher-yielding, emerging-market currencies. Peru’s BAP remains a BUY. Raise your stop $111.00.

iShares MSCI Chile Investable Mkt Idx (ECH) closed at yet another record high of $78.23 on Friday. Chile’s economy expanded 6.5% in September from the previous year — more than expected. ECH remains a BUY. Raise your stop to $72.50.

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ProShares UltraShort Euro (EUO) ended the week slightly lower. With “QEII” putting pressure on the U.S dollar, the euro’s fundamental weakness is being overwhelmed by an even weaker dollar. I am moving EUO to a HOLD.

Global X/InterBolsa FTSE Colombia 20 ETF (GXG) rose 3.62% this past week, as Colombia resumed its upward trend. GXG remains a BUY. Raise your stop to $43.50.

ICICI Bank Ltd. (IBN) rose a whopping 9.5% last week. India is back on the map for global investors and IBN remains a BUY. Your options are up 178%, but hold on to these for now. Raise your stop to $49.00.

Market Vectors Indonesia ETF (IDX) rose 1.67% last week. Despite earthquakes, this market keeps going and going. The “Next BRIC” remains a BUY. Raise your stop to $84.50.

Bank of Ireland (IRE). One word best describes the performance of this pick last week: “Ouch!” The stock fell sharply on the ongoing concerns of investors over sovereign debt in Europe’s PIGS. The good news is, unlike an option, this stock does not “expire.” I’m going against the tide here, but I am still convinced that you will see this stock climb a lot higher. As long as you think of this stock like an option, Ireland’s top banking turnaround play is a BUY.

Itaú Unibanco Holding S.A. (ITUB) jumped 6.9% this past week, closing at a record high of $26.44. Brazil’s largest private-sector bank reported a lower-than-expected third-quarter profit, as expenses rose in spite of a decline in loan loss provisions and strong credit growth. The company also paid out a dividend of 7 cents per share on Nov. 1. With plenty of momentum behind it, ITUB is still a BUY. Raise your stop to $23.50.

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SINA Corporation (SINA) jumped 5% this week and closed at a yearly high of $59.14. The company has scheduled its latest earnings announcements for Nov. 16. China’s Twitter remains a BUY. Raise your stop to $51.50.

iShares MSCI Thailand Investable Market Index Fund (THD) jumped 7.26% this past week. Moody’s Investors Service lifted the outlook on Thailand’s credit ratings to stable from negative, an improved assessment of the country’s economic and political outlook. THD remains a BUY. Raise your stop to $63.25.

Ivanhoe Mines (IVN) rose more than 10% this week. The company announced the appointment to the Ivanhoe Mines Board of Directors of Robert B. Holland III, a Dallas, Texas, oil executive and former United States executive director of the World Bank. Your bet on copper and the “mania for Mongolia” remains a BUY. Raise your stop to $22.00.

P.S. If you want to keep up with my latest insights on developments in fast-paced global markets, you can now follow me on Twitter on @NickVardy or on my new blog, NickVardy.com.

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