Midyear 2025 podcast ideas updates
Andrew Walker’s midyear scorecard is two positive developments and one slower-burn thesis, with Sage Therapeutics and Keros up while Full House Resorts remains down roughly 10% year to date. He remains long all three and argues that each still offers upside, though Sage’s remaining window is measured in weeks, Keros’s in months, and Full House’s in years.
Sage agreed to sell to Supernus for $8.50 per share plus a CVR, validating Walker’s call that it should sell rather than consume its cash. Yet the $561 million equity price implies less than $200 million of enterprise value after roughly $400 million of post-burn cash—below the $200 million financing previously available against its Zurzuvae royalties. To Walker, that “screams that this is a bid that’s designed to be beat.”
Biogen remains the “dog that didn’t bark” because it put Sage in play but was apparently absent after Sage kicked off the subsequent sale process. As Sage’s 50/50 Zurzuvae partner, Biogen knows the asset and can collapse the JV, giving it synergies unavailable to Supernus. Walker expects a topping bid within days or one to two weeks, before the tender closes; otherwise, he says Biogen is either “full of malarkey” about the drug or so poor at valuing M&A synergies that it should never do M&A again.
Shareholder pressure appears to have mattered at both Sage and Keros. Sage’s tender documents acknowledge investor frustration over the process and continuing cash burn, while Keros’s bruising director vote preceded a promised $375 million capital return. Walker’s lesson is that “50 small shareholders writing letters to the board” can carry weight even without forming a coordinated group.
Keros’s $375 million return is only a “nice start” against $720 million of first-quarter cash and equivalents. With its late-stage assets failed or partnered and only one early-stage drug plus preclinical programs remaining, Walker sees more than $300 million of retained cash and the current burn rate as unjustified. The return mechanism is still undecided, and he expects continued shareholder pressure to force additional distributions and cost reductions.
Full House’s operating picture has split sharply: American Place is outperforming, while Chamonix has ramped “much slower than I expected.” The temporary Waukegan casino is setting records and could support a permanent property producing roughly $100 million of EBITDA; Walker has cut his practical Chamonix expectation from $50 million toward $25 million. The decisive near-term catalyst is a refinancing that he expects to complete without equity dilution, after which construction execution becomes the central risk.
Full House insiders are backing their valuation claims with unusually emphatic purchases. CEO Dan bought more than 270,000 shares—nearly 1% of the company—at $4.75 when the market price was around $3, largely for trusts benefiting his children and from his ex-wife. Walker’s deliberately memorable formulation: insiders buy “from their ex-wife at a 50% premium…when they think the stock will rise by a heck of a lot.”
1. Sage’s sale validates the thesis, but the price looks deliberately beatable
Walker’s original Sage thesis offered the board two paths: be a “good girl” by running a sale process and maximizing value, or be a “bad girl” by preserving an unaligned management structure while burning the company’s cash. The agreed sale to Supernus for $8.50 per share plus a CVR puts the company firmly on the first path—“winner winner chicken dinner”—and should remove Sage from public markets within six to eight weeks.
The headline consideration understates how cheaply Supernus is acquiring the company’s remaining assets. Its $561 million equity payment compares with $424 million of cash at March 31, 2025, or roughly $400 million after assumed interim burn, leaving less than $200 million of enterprise value. Sage previously had access to a $200 million royalty financing against Zurzuvae, making the purchase price lower than what a financier was prepared to lend against the drug.
Walker assigns limited value to the CVR because, in his reading, only one of its smaller milestones is likely to be achieved. Even without a competing offer, he considers Supernus’s purchase “an absolute song” once the cash and Zurzuvae economics are separated from the headline valuation.
2. Biogen’s absence is the unresolved event-driven catalyst
Walker calls Biogen “the dog that didn’t bark.” Biogen put Sage in play but, according to the tender documents, did not participate after Sage kicked off the sales process—even though it owns the other half of the Zurzuvae partnership, knows the asset best, and could collapse the 50/50 JV to capture substantial synergies.
No other operating buyer has comparable synergies; a royalty investor is the only plausible exception. That makes the current valuation especially difficult for Walker to reconcile: “The fact that this company is getting acquired for less than a royalty buyer was willing to finance this drug…screams that this is a bid that’s designed to be beat.”
His expectation as of July 7 was that Biogen would top the bid within days or one to two weeks, before the tender closes. His blunt two-way alternative if Biogen does not bid: either its public enthusiasm for Zurzuvae is “full of malarkey,” or its discount rate and M&A judgment are so poor that it should never do M&A again.
3. Shareholder pressure changed Sage and may not be finished at Keros
Sage’s tender documents explicitly note that stockholders complained about the process’s duration and continuing cash utilization. Later references to completing the sale before the annual meeting suggest to Walker that directors feared an embarrassing shareholder confrontation: “You want the board to feel a little bit of heat.”
He does not claim sole credit and stresses that larger investors were also pressing the company. His broader conclusion is that dispersed engagement still matters: “50 small shareholders writing letters to the board reminding the board of their fiduciary duty—that carries a lot of weight.” It cannot guarantee an outcome, but it can disrupt a board’s preference for the status quo.
At Keros, strategic alternatives followed almost immediately after Walker’s April podcast, and the company has now announced that it will return $375 million. Against $720 million of cash and equivalents at the end of Q1 2025, however, he calls that only a “nice start”; the company has not decided whether to use a dividend, tender offer, accelerated repurchase, or another mechanism.
Walker’s core objection is operational as much as financial. Keros’s important late-stage products have either failed or been partnered, leaving one early-stage drug and a couple of preclinical assets; that portfolio does not require more than $300 million of retained cash or the current “way too high” burn rate. He wants deeper cost cuts, more capital returned, and some partnership value passed through to shareholders.
4. Keros’s board vote leaves directors with little room to ignore investors
The annual-meeting results reinforced Walker’s view that dissatisfaction extends beyond his own position. Of three directors on the staggered board, the director affiliated with Keros’s largest or second-largest shareholder won overwhelming support, while one incumbent received enough withheld votes and broker non-votes that Walker believes the director should have resigned; another produced an approximately 50/50 result.
Those outcomes were particularly damaging because the company already had a support agreement with one shareholder. Walker believes the vote helped produce the $375 million announcement, but not an adequate response: “I don’t know how the board would not get the memo here.”
ADAR1, identified by Walker as Keros’s largest shareholder, separately described the election results as troubling and the capital return as insufficient. Walker agrees and expects more cash to be distributed in the near to medium term; otherwise, his warning to the non-aligned directors facing the next annual meeting is simply “godspeed.”
5. Full House’s strongest asset is accelerating while its prestige project disappoints
Full House Resorts is the blemish in the scorecard: Walker’s 2025 idea is down about 10%, versus Penn at roughly negative 10%, Caesars negative 15%, Boyd positive 7%–8%, and MGM approximately flat. Some weakness is sector-driven, but Full House’s leverage leaves it especially exposed; Walker’s response is to “rub my nose in it,” not hide the mark.
American Place in Waukegan is performing “phenomenally well.” Full House spent roughly $200 million on the temporary casino—housed in what management compared with a municipal winter salt-storage structure—and expects another approximately $300 million for the permanent facility. March set an all-time record, May was second only to March, and Walker believes the finished property could generate $100 million of EBITDA.
January’s Illinois Supreme Court decision dismissed the nuisance lawsuit and ruled in favor of the Illinois Gaming Board, removing the tail risk around the gaming license. Construction can begin toward the end of 2025, proceed substantially through 2026, and produce a 2027 opening. Financing and construction remain material risks, but Walker argues that American Place alone could ultimately be worth at least Full House’s current enterprise value: “American Place is full speed ahead.”
Chamonix in Cripple Creek is the offset. The upscale French-style resort was intended to transform a penny-slot market that included the Brass Ass Casino across the street and its Dynamite Dick’s restaurant, but its ramp has been far slower than either Walker or the company expected. Management fired the general manager after an undercover operational review; where Walker once hoped for $50 million of EBITDA, he would now be pleased with $25 million, while the company’s $50 million aspiration feels like “before the heat death of the universe.”
6. Insider buying makes refinancing the pivotal Full House catalyst
Full House’s CEO has outlined approximately $45 per share of eventual value. Even removing prospective growth projects and applying time-value discounts, Walker struggles to get below $20, versus a stock price near $4—potentially a five-bagger over five years, though American Place must still be financed, built on budget, and successfully ramped.
Director Eric Green bought 25,000 shares at $3.40, committing more than his $62,000 annual cash director compensation and increasing his ownership by over 10%. The larger signal came June 13, when CEO Dan bought more than 270,000 shares at $4.75—over 50 basis points and nearly 1% of the company—even though the shares were trading near $3 and had not reached $4.75 since March 1.
Dan acquired some shares personally and most for trusts benefiting his children, purchasing them from his ex-wife. For Walker, the transaction’s negotiated premium turns Peter Lynch’s familiar insider-buying maxim into something stronger: it is “actions backing up words” by the same CEO who publicly argued for $45 of value.
The remaining overhang is roughly $300 million of incremental funding for American Place, likely within a much larger company-wide refinancing against a market capitalization below $150 million. Dan’s new contract pays a $300,000 bonus if principal debt is refinanced by March 30, 2027; Walker expects completion in the second half of 2025 without equity-raise dilution. If that occurs, removing financing and dilution risks could reprice the stock sharply—leaving execution, overruns, and casino ramp-up as the “big if.”
Full transcript
Today, I am going to be doing an update on the 3 ideas that I solo presented to you over the first half of the year. Those are updates on Sage Therapeutics, Keros, and Full House Resorts. Full disclosure: I am long all of these stocks. I'll give a couple more disclosures and disclaimers in the podcast, and there's a full disclaimer at the end.
Updates are always interesting. I know there's been interesting news at all these companies, so I wanted to take a second to give those updates, put a bow on 2—maybe 1.5 or 2—of the 3, and give an update on where everything stands.
One of the most popular requests I get on the podcast is, “Hey, you had guest XYZ on to talk about stock ABC 6 months ago. Let’s get an update. The stock’s down 20%, it’s up 100%, whatever. Let’s get an update.” It’s hard to get guests on to do an update, but one of the nice things about being the host of your own podcast and coming on every now and then to talk about ideas is that you can force yourself to come on the podcast for updates.
Today is July 7th. I pitched 3 ideas throughout the year—solo pitches where I get on here and talk about an idea for 30 minutes, 20 minutes, an hour, 5 hours, who knows? Today, I’m going to be doing an update on the 3 ideas that I’ve talked about so far this year. Those are Sage, Keros, and Full House Resorts.
Full disclosure: I am long all of those stocks. On top of that disclosure, I’ll add a disclaimer that nothing on this podcast is investment advice. There’s a full disclaimer at the end of this podcast, but I’ll remind you of 2 things from the disclaimer. Again, I am long all 3 of these stocks. The second disclaimer is that I do a random rambling every week, and last week I forgot to turn the microphone on. For 30 minutes, it was just me waving my arms like crazy and saying nothing. That’s 30 minutes I’ll never get back.
Just ask yourself, “This guy claims to be a professional, semi-professional, whatever it is, podcaster, and he can’t turn a microphone on. Should I be listening to him about anything?” Probably not. So, those are the disclaimers.
So far this year, I have done 3 what I call solo ideas. It’s me getting on and talking about a stock situation. For all 3 of these, again, I’m long. I’ve thought about doing stocks that I’m not long, and I might in the future because, as I’ve gotten increasingly into corporate governance, you can go down some deep and very dark rabbit holes. I might try to shine a light on some situations.
The 3 ideas I’ve done so far are Episode 283, where right at the start of the year I did my Full House Resorts idea of the year for 2025; Episode 292, where I did a special situation on Sage Therapeutics; and Episode 305, where I did “Avoiding the Zombie Biopharma Trap” at Keros. I’ll include links to all those episodes in the show notes if you want to go listen to them.
On top of those 3 ideas, I also did an open letter to the Sage board that I published on May 1st, 2025. I’ll include a link to that as well. I said, “Hey, Sage, I did this original podcast on it.” When I did the Sage podcast, the idea was that Sage had been put into play by Biogen. Biogen had made them an offer, and I said, “Sage, you have 2 options.”
You can take what I called the good-girl route, along the lines of my dog Penny. You can be a good girl like Penny is, and you can do what’s right for shareholders: run a process and sell yourself to the highest bidder. Or you can be a bad girl, and because your board and management own nothing, you can refuse to sell yourself, burn all your cash, and burn this company to the ground.
I published the podcast hoping they would go the good-girl route. I published the open letter when it seemed to me like they might want to go the bad-girl route. Fortunately for everyone, as we’ll discuss, it has kind of ended up for the best.
I also published an open letter to the Keros board on May 9th. Two open letters in a week—it was an exciting time. The Keros open letter was extremely similar to the Sage letter: Look, you’re a subscale biotech, your lead drugs have failed, and you need to do what’s right for shareholders.
Let’s start with the easiest company to update. That company is Sage. The thesis here was that, in early January, Biogen had put Sage in play. Sage’s stock at the time was in the low $5s. Biogen offered in the low $7s per share. I said in my podcast and my open letter, “Look, Sage should no longer be a public company. The value to an acquirer is much higher than the share price as it is. I think the company needs to sell itself.”
I’ve got another slide here: “Winner, winner, chicken dinner,” because earlier this month Sage entered a deal to sell itself for $8.50 per share plus a CVR. Here’s the thing: They’re getting acquired. This is the simplest story because, in 6 or 8 weeks, Sage isn’t going to be a public company anymore. They’re going to be gone. They’re going to be off the board.
I’m not just doing this update to take a victory lap and spike the football, even though it is a little bit of that. I’ve been told by people, “Hey, if you’re going to rub your nose in the losers—and God knows I love to rub my nose in losers—you need to celebrate the winners a little bit more and be a little more public.” So, yes, I am spiking the football a little bit. Deal with it.
But I don’t think it’s the end of the story here. Sage is getting acquired by Supernus Pharmaceuticals. Supernus is a nice pharmaceutical company. I don’t know a lot about them. They are paying $8.50 per share plus a CVR.
If you read the tender documents—and you should—I did a full deep dive into the tender documents because they are some of the craziest tender documents I’ve ever seen on the premium side. I won’t dive into it too far, but if you read the tender documents, the CVR has a lot of milestones. Only 1 of the smaller milestones is really likely to get hit. I think that’s interesting in and of itself.
But let’s just focus on the cash portion. Supernus is paying $8.50 per share in cash. That’s $561 million. Why is that interesting? Because Sage had $424 million of cash on its balance sheet as of March 31, 2025. Call it $400 million after cash burn by the time the acquisition goes through, whatever. However you put it, Sage is getting acquired for less than $200 million in enterprise value.
That’s really interesting to me because, if you read Sage’s tender documents, they had a royalty deal that would let them borrow $200 million against their lead drug. So Sage was getting acquired for less than the royalty financing that this lead drug was worth.
I’m calling this “the dog that didn’t bark” because, if you’ll recall from my original podcast and my original thesis, the best buyer—the only buyer who makes any sense for Sage—is Biogen. Remember, Sage is 2 assets.
They’re a pile of cash, and they’re the JV asset that they have with Biogen on Zurzuvae. It makes absolutely no sense for any other buyer of Sage to be the buyer except for Biogen, because Biogen can take that 50/50 JV and collapse it. There are huge synergies there, and they know the asset best.
There are some niche cases where a royalty buyer might be a better buyer of Sage, but put those aside. No operating company should be buying Sage except for Biogen. I call this “the dog that didn’t bark” because, if you read the tender documents, Biogen is not involved in the sales process at all after Sage kicked off the sales process. I remain firmly convinced that Biogen is the best bidder here.
What I would say is that I don’t think this story is over. I think Biogen will be heard from, and I think there’s a decent chance that Biogen comes up with a topping bid. Again, I’m recording this July 7. The tender documents just came out late last week. It’s possible that—I’ll probably get this up July 9 or July 10—it’s possible Biogen comes with a better bid on July 8. It’s possible it comes a week after or 2 weeks after, but it won’t be 3 weeks after because the tender will be done. They’re going to have to move pretty fast, and I anticipate they will.
Again, the fact that this company is getting acquired for less than a royalty buyer was willing to finance this drug, to me, screams that this is a bid that’s designed to be beat. I would just say one thing: Biogen is the best bidder here. I’ve got a screenshot here from Biogen’s Q1 earnings call. They do the typical IR thing where the person comes on and says, “Welcome to Biogen’s Q1 earnings call,” and then the CEO comes on and says, “Hey, we’ve got a new CFO. Welcome.”
The first drug he mentions—literally, in the first paragraph, the first drug he mentions by name—is Zurzuvae. I would say two things. Biogen, we have 2 options. Number 1: if you can’t pay more than a royalty company was willing to finance Sage’s share of this key drug that you mentioned—the first thing you mentioned in your own call—your shareholders should say, “You are full of baloney. You should never mention this drug again. You have no belief in the value of this drug. You think it’s basically a worthless drug, right?” That’s option 1.
Option 2 is: your discount rate is too high. If you can’t top what a royalty financier would bid with all your synergies and everything—if you can’t outbid an operating company that’s going to have no synergies with this JV—then you can never do M&A again, because you guys are the worst acquirers of all time. You have no clue how to value a company, and you have no clue how to evaluate synergies. You should never do M&A again. It’s one of those 2 options if they don’t come over the top for Sage. That’s bluntly how I would put it.
It would be absolute insanity to me if Biogen didn’t come over the top. The only reason it could be is if Biogen is full of malarkey when they mention Zurzuvae in public, or if the management team is absolutely brain-dead when it comes to M&A.
That’s Sage. The last thing I want to point out here is that I’d encourage you to read the tender documents. I published a full post breaking them down; they’re some of the most interesting, fascinating, crazy tender documents I’ve ever seen. But I wanted to point out one thing here.
When you read Sage’s tender documents, there is an interesting line that says, “As Sage’s strategic alternatives process progressed, certain stockholders also wrote to the board expressing frustration with the length of time the process was taking, given Sage’s continuing cash utilization.” I would just like to say, “Thank you,” to Sage’s board. It’s nice to be seen in the proxy. I say that facetiously, but the real thing is this: people ask why I do these open letters and publish the podcast. This is the reason—companies need to hear from their shareholders.
If you’re a shareholder, you’re a shareholder for one reason: you want the stock to go up. You want the stock to work. You want the company to be more valuable. You want to maximize the value. Sage’s board was clearly feeling the heat from its shareholders. I am one, and I’ve disclosed that. I think that when people heard the podcast the first time and saw my open letter, they contacted the board and let them know what their views were. I’m not trying to form a group with anyone; I just believe in good shareholder engagement.
This is what you’re doing it for, right? You want the board to feel a little bit of heat. This board, which doesn’t own any stock and which, in my opinion, would have preferred not to run a process, continue collecting paychecks, continue collecting everything, and have the prestige of being on a board, wanted the status quo. One of the reasons they don’t have the status quo is that they were feeling extreme heat from shareholders.
Yes, there were some shareholders who were larger than me—larger than any of my listeners—who I’m sure were putting just as much pressure on the board. But the fact is, 50 small shareholders writing letters to the board and reminding the board of its fiduciary duty carries a lot of weight. I just wanted to call this out when people say, “Oh, these open letters and these podcasts are silly.” In my opinion, they’re not, and I don’t think they were in Sage’s opinion, either.
If you read the tender document, I think it was a real needle-mover in getting the process going. Later on in the process, if you read the background section of the tender documents, you would see them referring to the need to get this process done before the annual meeting takes place. I think they realized that the annual meeting was going to be embarrassing for them. If it went on beyond the annual meeting, it was going to get really embarrassing for them.
I do think good, engaged shareholders can really impact a process and help drive a good outcome. It doesn’t mean it’s guaranteed, but I think it certainly helps, and this is just one example of that.
That wraps up Sage. I’m probably never going to have to talk about this company again because, again, in 6 to 8 weeks they’ll be gone. I hope and expect that they will be gone, with Biogen making a topping offer and acquiring them. But it’s possible they go to Supernus, and if so, Supernus is going to have made an incredible acquisition because they acquired Sage for an absolute song after taking the cash and the value of the Zurzuvae asset into account.
Let’s move on to Keros. Great timing on my end: I basically published the podcast from memory. I published it on a Wednesday in early April, and on Thursday or Friday, Keros came out and announced strategic alternatives. So, great timing on my end. The stock has gone a lot higher, but I’ll be honest with you: this is a nice start. I think there’s more to go.
If you’re watching on YouTube, I’ve got a clip from the announcement of the excess capital return that Keros made when they concluded their strategic alternatives process. They said, “Hey, we’re returning $375 million to shareholders.” That’s a nice start. Keros had $720 million of cash and equivalents on its balance sheet at the end of Q1 2025.
Are they burning cash? Yes. In my opinion, cash burn is way too high here. This is a company whose key late-stage products either failed or have been partnered. They have 1 early-stage drug and a couple of preclinical drugs. A company with 1 early-stage drug and a couple of preclinical drugs does not need more than $300 million in cash on the balance sheet.
It’s not only extremely inefficient; it’s a sign that the management team wants to go and do a lot of things that, in my opinion, are suboptimal for shareholders. So, with Keros, I’d say we’ve had a nice start. The company announced strategic alternatives, but there is more work to be done.
First, while they said, “Hey, we’re returning $375 million,” they haven’t announced how they’re returning it yet. They haven’t decided how they’re returning it. Are they going to do a tender offer? Are they going to do a dividend? Are they going to do something I haven’t dreamed up yet? I don’t know. Probably can't tender offer a dividend because there are only so many ways you can return cash to shareholders. I guess there’s accelerated stock repurchase stuff.
I would just note that there’s more work to be done because I think the company held on to too much cash. I think the company needs to significantly bring down its cash burn. I think the company needs to look at ways to return some of the partnership value that they have to shareholders. Nice work so far.
Again, if you remember my first podcast, I did it and published the open letter because I became increasingly concerned that the management team and parts of the board were not aligned with shareholders. So, I think there’s more work to be done. I think more cash should be returned, and I think the company needs to explore bringing the cash burn down dramatically.
I would just note that I don’t think I’m alone in this. What I’ve got here is a screenshot from alongside the capital return: they published the results of the annual meeting. This is a staggered board, and 3 directors stood for election.
One director who is affiliated with their largest or second-largest shareholder received an overwhelming number of votes. For the other 2 directors, one of them, if you add up the votes withheld and broker non-votes, basically—I believe—should have resigned on the heels of this. The other director faced a very close call, with the votes basically 50/50 between votes for and votes against himself. Given that they had a support agreement with 1 shareholder, I think this was a disastrous result for the board.
I think it’s one of the reasons you got $375 million back. I think it should have been more. I’d note, I’m not from a group, but ADAR1, who is now Keros’s largest shareholder, published a PR that said, “Hey, troubling results of 2025 director election; insufficient capital return.” I agree. I think if shareholders keep the pressure on the board, given those board vote results, I don’t know how the board would not get the memo here.
I fully hope and expect more capital to be returned to shareholders in the near- to medium-term. If not, given the shareholder vote results, Godspeed to the non-aligned directors at the next meeting.
All right, let’s go to the last company. I want to talk about Full House Resorts. We did 2 winners with Sage and Keros to start, so let’s go to Full House Resorts and let’s rub my nose in it. So far, this was my idea of the year for 2025. So far, it has not worked out super well.
The stock’s down about 10% year to date. A lot of that, I think, can be attributed to the sector. The gaming sector has not been great so far this year. I’ve got a screenshot of the most direct peers. There are some smaller peers out there, but Full House is a lot smaller, too.
Penn is down 10% so far this year. Caesars is down 15%. Boyd is actually up about 7% or 8%. MGM is about flat on the year. So there’s been a little bit of negative sector beta, and given that Full House is the most levered of all of these companies on a headline basis, it’s probably not surprising that they’re toward the bottom.
Personally, I’ve been reasonably pleased with how the year has gone for FLL. If you’ll recall, the thesis for FLL is that this is a small-cap company that, through kind of a miracle and excellent operation, is bringing online 2 giant casino projects within 24 months.
The 1 that’s going to be the most valuable is American Place outside of Chicago, in Waukegan, Illinois. They invested, let’s round it up, $200 million to bring a tent—literally, a giant tent—online. If you read the quote, it’s the type of structure that your municipality uses to store salt for the winter. They opened a temporary casino there and spent about $200 million.
That is doing phenomenally well. They’re going to spend another $300 million or so to turn that into a full facility. I believe all in, they’ll have spent $500 million, and at the end of the day it’ll be a casino that does $100 million in EBITDA. In my opinion, this is the most valuable, most important project for Full House.
The good news here is that it’s doing fantastically well. At the very top of this slide, I’ve got a quote from their Q1 results. They’re having record months basically every month right now. March was an all-time record. April was really good. You can go look at the state-level data; May was the 2nd-best month of all time, just behind March.
The temporary casino is doing great, and I think there’s every sign that once they open the full casino, it’s going to do well. The other update on American Place is that, if you recall when I did the podcast, there was, in my opinion, a nuisance lawsuit that stopped them from going forward with the full project. I was pleasantly surprised when, in January, the Illinois Supreme Court dismissed the nuisance lawsuit and ruled in favor of the Illinois Gaming Board.
That takes the tail risk of, “Hey, what if the Waukegan license is lost? What if it’s delayed indefinitely?” off the table. The company can now start building the permanent casino toward the end of this year, really get this thing done in 2026, and open it in 2027. So the tail risk of losing the license—that’s all gone.
Now, you do have the risks of financing and actually constructing it. Those are obviously big risks, but the tail risks are off. I think American Place is full speed ahead. If it does $100 million in EBITDA, as I hope and expect—and I think the results right now suggest they might do better than that when it opens in full—it’s going to be worth all of the company’s enterprise value and more, in my opinion.
So that’s doing great. That’s ahead of schedule. The negative is Colorado—Chamonix. If you’ll recall from the 1st podcast, this is the casino that they opened up in Cripple Creek. The Cripple Creek market was characterized by there being a casino—what is it? Dynamite Dick’s Casino? No, the Brass Ass Casino. Across the street is the Brass Ass Casino. The restaurant there is Dynamite Dick’s. That gives you an idea of what the Cripple Creek market was.
It’s a penny-slot play, with people drinking Bud heavies and playing penny slots. They built Chamonix, which is an upscale French luxury resort. They said, “Hey, we’re going to build it. We’re going to transform this market.” I think if it’s successful, it’s going to be one of the highest-multiple casinos in the country because the dynamics of the market are so unique. It’s basically a historical town. No one will be able to build and respond with a competitive casino.
I was really excited about it. I’ve been out there, and I think it’s a great-looking casino. It’s ramping more slowly than I expected. Hard stop: slower than I expected. Much slower than I expected. It’s slower than the company expected, too.
The company fired the GM. They said, “Hey, he was over his head.” In Q1, they did some undercover work—someone went undercover to get to know the operations—and fired the GM and brought in a new guy. It’s going a lot slower than I expected. I was hoping for, kind of, next year or the year after that, $50 million in EBITDA. At this point, I’d be pleased with $25 million in EBITDA.
I think the company still hopes to get to $50 million in EBITDA, but it’s one of those things where, “Hey, we’ll get there someday. Before the heat death of the universe, we think this will do $50 million in EBITDA.” So I think that’s going slower.
All in, I’d say this story is American Place doing better and being the most valuable casino, while Cripple Creek is doing much worse and being what I think would be the highest-multiple casino, though not the most valuable. American Place is going to do 2.5 times the EBITDA that Cripple Creek does. That’s a slight negative, but I think the story is on track, to be honest with you.
You’ve taken off a tail risk. American Place is doing great. I think the story is on track. The nice thing here, and the reason I want to do an update on Full House, is that insiders clearly see the same upside.
This is a quote from the company’s Q4 earnings call. You can read it or go look it up if you want, but the basic idea is that the CEO, who, again, I’m kind of a fanboy of—I’ll own my biases—walks through a bunch of math and says, “Look, when I put our model together, I kind of think we’re worth $45 per share once all of this is said and done and everything ramps up. Take out some growth projects that I think are going to happen. Take some time value of money, whatever you want to do. It’s hard for me not to get to $20 per share of value.”
Again, we’re talking about a stock that closed at $4 per share. So if it’s $20 per share of value 5 years from now—and I think he’s time-discounting once he gets to that $20—that’s a 5-bagger over 5 years. It could be significantly more. I think the insiders clearly continue to see the upside that I see.
I would point to something: Words are 1 thing, but insiders are backing their words up with action. Eric Green, who is a director, for the 1st time in a long time bought 25,000 shares at $3.40 per share in mid-May, right when the window opened up. That’s not a small buy. That’s $75,000-plus worth of stock.
Eric made $62,000 per year in cash compensation as a director, so more than 1 year’s worth of director fees went into buying stock on the open market. It increases his stock ownership by more than 10%. Would I love to see more? Would I love to see every director buying constantly? Yes. But this was a significant insider buy for a director who doesn’t have a ton of history of insider buying here.
So that’s 1 sign. But the really big 1—the headliner, the 1 that I’ve been waiting to tell you guys all about—is Dan, the CEO. On June 13th, my birthday—happy birthday to me—Dan made an enormous insider buy of more than 270,000 shares at $4.75 per share.
What’s interesting about this is, first, more than 270,000 shares—let’s round it up—that’s 1% of the company that he buys in 1 fell swoop. It’s under 1%, but we can round it to 1%. It’s well over 50 basis points of the company that he buys. So this is an enormous buy.
But did you read the price I said? $4.75 per share. I’ve got a stock chart of Full House Resorts on YouTube. The stock hasn’t traded for $4.75 since March 1st. At the time that he does this buy, the stock is trading for $3 per share, right?
So he goes out and negotiates—I’ll talk about the negotiation in a second—and buys 1% of the company at a more than 50% premium to the prior day’s closing price. And this is the same CEO who went on the Q4 earnings call and laid out the math for getting to $45 per share in value. If that’s not actions backing up words, I don’t know what is.
You’ll notice I said “negotiate.” If you read the fine print of the Form 4 and dig around a little bit, he buys some of the shares for himself and the majority of the shares for a trust account for his kids. Who does he buy the shares from? He buys the shares from his ex-wife.
Again, I don’t know Dan, and I don’t know his ex-wife. His ex-wife is a member of the House of Representatives, so she’s a political figure.
You can Google it around; the divorce looked kind of contentious to me. What divorce isn’t, right? But I would just say, if you go and your ex-wife owns shares—and I think it had been dragging on the stock—Dan kept filing Form 4s, and it was his ex-wife selling shares and everything. So he took her out of this in one fell swoop, too.
I would just posit that if you’ve got a well-known insider figure who buys 1% of the company from his ex-wife, with whom he’s going through a contentious divorce, closes out the contentious divorce by buying 1% of the company, and puts it all in trust accounts for his kids, which is very tax-advantaged. There’s an old Peter Lynch saying that insiders might sell their shares for any number of reasons. They might have a kid graduating, they might have medical bills, they might want to buy a house—all that sort of thing. They might sell their shares for any number of reasons, but they buy them for only one: They think the price will rise.
It’s a great, famous Peter Lynch quote that has survived for 30 years and is very popular among value investors. I’m giving you my new Andrew Walker quote. I think it’s better than the Peter Lynch quote. I expect royalties if you ever use this.
I expect it to be written about in books by scholars hundreds of years from now. The human race will die out—thousands, tens of thousands, millions of years from now—but this quote will live on. I expect it to be my legacy here.
“Insiders buy for only one reason: They think the price will rise. But they only buy from their ex-wife at a 50% premium to the market price for their children’s trust account when they think the stock will rise by a heck of a lot.” That’s Andrew Walker. That’s my new quote. That’s my legacy. That’s what I want to leave you with.
So, look, that’s Full House. I’m trying to end on my quote, but I’ve got one more thing I want to note. I think one of the things that’s holding the company back is that they have to do a big refinancing. They need to raise $300 million of incremental financing, which probably means an entire company refinancing in order to get the cash to build American Place. Full House is an under-$150 million market cap company at current prices.
I think people look and say, “Oh my gosh, it’s a $600 million, $700 million, $800 million refinancing if they’re going to raise that incremental money plus refinance all their debt. It’s a $150 million company. Oh my God, that’s really hard.”
I would just note that right alongside Dan making this insider buy, he signs a new CEO contract that takes him through another 5-ish years. There’s lots of interesting stuff inside of it, but the one that I wanted to point out was this debt overhang. Dan will get a $300,000 bonus if the company successfully refinances the company’s principal debt by March 30, 2027.
Dan has consistently said that they’re going to get a refinancing done without raising any equity. I think if and when the refinancing is done, there are 2 major risks on the stock at this point: number 1, the refinancing; number 2, construction overages at American Place. I think when the refinancing gets done, that’s a huge, huge uncertainty removed from the stock. I think the stock will go up significantly if there’s no equity-raise dilution associated with it.
I expect there will be no equity-raise dilution associated with it. Dan is very incentivized for there to be no equity-raise dilution associated with it because, A, he just bought almost 1% of the company, and, B, he’s been saying for a while that there will be no equity raise. Anyway, in his contract, he now gets a $300,000 bonus if they refinance it.
I think they will get a refinancing done in the back half of this year. I think when that happens, that insider buy is going to look very, very prescient because I think the stock will go up by quite a bit as the market adjusts to, “Hey, refinancing risks are off the table. Dilution risks are off the table. All we need now is for the casinos to get built on budget, on time, and ramp up.”
That’s a big if, but I think it really takes uncertainty away. Look, we’re 2 for 3. Sage worked out really nicely. I think there’s more upside there. Keros worked out really nicely. I think there’s more upside there.
Sage’s upside—we’ll know in the next few weeks if there’s a buyout offer. Keros probably takes a little bit longer, but I think with activist shareholders saying, “Hey, I’m a concerned shareholder. You’re keeping too much money. Management overpaid. The cash burn’s too high for the assets the company has,” I expect upside there. I expect upside at Sage, and FLL so far is a loser.
It’s down 10% on the year, while the Russell is flat. Yeah, it sucks, but this is a small, micro-cap company, and it can be a little skittish. I think there is a heck of a lot of upside over the next few years as the refinancing gets done, American Place comes online in full, and the new GM at Cripple Creek comes on and gets costs in line.
I think there’s a heck of a lot of upside. But it’s not just me. It’s the insiders. They’re signaling constantly that they see the upside. They’re saying they see the upside, and they’re backing those words up with actions to share in the upside.
I’m really excited. It’s been a little bit slower than I thought, but I’m really happy to have FLL as a big position for me personally. Again, that’s my disclosure. I’m really happy to have FLL as my pick of the year for 2025. I think the back half of the year is going to make me look good, and if the back half of the year doesn’t, I’m positive 2026 and 2027 are going to make it look good. In the medium to long term, I think it’s going to look like a really good pick.
So anyway, that is my rambling for my midyear update.