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LAS VEGAS-Applied Analysis’ Gaming Index reversed a three-month slide in September, rising 12.1 points, or 3.6%, to 349.1. The locally based research firm’s Index tracks the stock prices of nine casino companies with significant operations in Nevada. Launched in 1998 with a value of 100, the Index crested in May at 379.3 and declined in June, July and August, bottoming out at 337.

Valuations began to bounce back at the end of August and carried into September, when eight of the nine companies in the Index posted month-to-month increases in their daily average stock prices. For comparison, the S&P 500 (when computed on a similar basis) reported a 2.3% month-to-month increase. Year-over-year, the Index is up 20.6%, compared to 7.4% for the S&P 500. While the Index as a whole is up 20% on a year-over-year basis, the performance was not spread evenly across the Index.

The companies in the index include Harrah’s Entertainment, Las Vegas Sands, Wynn Resorts, Boyd Gaming, Station Casinos and WMS Industries. Compared to last year at this time, the average daily share price of Harrah’s, Station and MGM have fallen between 13.5% and 17.9%, while that of WMS, Wynn and Las Vegas Sands are between 44.6% and 95.2% higher than 12 months ago.

Applied Analysis principal Brian Gordon says the declines in recent months were due in part to investor profit-taking while September’s rise reflects the positive expectations for gaming operators and manufacturers. Earlier this week, a pair of private equity firms offered to acquire all the outstanding shares of Harrah’s for $81 per share, a 22% premium to the share price the day before the offer was announced.

The same day as the offer, Harrah’s and Boyd Gaming announced a land swap. Boyd is getting 24 contiguous acres next to its 63-acre Eschelon Place development site an Harrah’s is getting the Barbary Coast Hotel and Casino. The transaction will give Boyd 87 contiguous acres on the Las Vegas Strip for its multibillion-dollar Eschelon Place project, which is replacing the Stardust Casino. The addition of Barbary Coast will give Harrah’s 350 acres.

The day before the announcements, Harrah’s share price closed at $66.43. The day of the announcement, it closed at $75.68 after trading for as high as $80.01. On Tuesday, the share price fell back a little, closing at $74,71. Some gaming analysts have said the LBO offer if nothing else shows that the company has been undervalued.

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