This has become a recent new, large position. We buried the Lede in our Strategy Letter, so here it is unvarnished for those afraid of TLDR.

Here is our Letter to the Board, which got a recent “perfunctory lawyered letter acknowledging receipt. That is just above, but not far from a complete Heisman response. It is very far from an appropriate call from, say, the Lead Director, earning his $250k annual stipend.

Here is the cut and paste from the Strategy Letter:

Which brings us to Six Flags Entertainment – FUN. This has been owned on and off for 25 years along with a few of its peers from time to time. It has cyclicality in the business and how investors value it. We would and continue to argue that a well-run regional theme park business is a solid moat business with high margins, returns and solid free free-cash flow. But it is not a straight line due to “need something new” capex spending and the vagaries of attendance, which can be affected by general economic conditions, gas prices, and the relative insanity of management on how they price tickets. But somehow, here we are 25 years later making almost the same pitch. We see higher labor costs as real, but much of the rest is the same. This is a place for kids under 21 to get the hell out of their parent’s Dodge and for the next generation of parents who have exhausted every other entertainment option for their kids. You know who you are.

One thing that has changed is we have a mess on a much bigger scale as Six Flags and Cedar Fair merged last year, bringing together a management team that couldn’t run a theme park with a management team that can’t run an integration.

Naturally, we think we know better. And we aren’t tied to legacy acrimony. So we are sticking our nose in the mix here and being public with this Letter to the Board. First a word to the math. Take the trailing 12 months and add 20% to it and put a ten multiple of EBITDA. Then take the Aspirational Plan in the Sky and take 20% off it and put on a ten multiple. That will give you roughly 39 and 77. That is unadjusted for nonsense or stock comp and uses the current debt level. The stock is 23 as of this writing. Different fun can be had taking capex down and making attendance projections on a DCF. And there is arguably well north of $500mm of potential asset sales that will barely dent operating earnings. One of the funny things about theme parks is many of them were built “way out of town” 30 years ago. Now, they are right in the middle of high-end suburban construction where “higher and better use” may be a value add.

Read the letter. We have a “guy” who sits on the Board with a non-theme park background. That background was CFO for a decade of what has become ABInBev, so he has the ability to set in place proper integration at a pace that is not the current pony trot. This is not “activism,” this is simply paying attention to what you own and helping shorten the road to the bank.

The work in recent weeks in Six Flags is oddly reminiscent of the world in 1999 when efforts were focused in “insurance and food” as the natural antidotes to the dot-com craziness on that time. I “feel” a whiff of that pattern today. I think I have used this Walter Lippmann quote before, but I still like it… “I am ashamed,” Lippmann wrote of his post-World War I idealism, “all the more so because I had no excuse for not knowing better.”

Operators are standing by.