Welcome back to Condor Monthly, Condor Capital's monthly client newsletter. In this issue, we introduce David Li, our new information technology analyst, discuss with you our reasoning for the purchase of Harrah's Entertainment (HET) in many of our clients' accounts, and share a very flattering article run last quarter by Bloomberg Wealth Manager, a magazine for investment advisors, featuring Condor Capital and highlighting our usage of technology to serve our clients.
What's New at Condor Capital
Condor Capital is pleased to announce the hiring of David Li as an information technology analyst. David is a December 2004 graduate of Rutgers University with a double major in Computer Science and Economics. He worked for Condor Capital as an intern for about seven months prior to graduation assisting in the design, development, and maintenance of several systems. With his background in IT and economics, he understands both the business and technical sides of investment management and is a valuable addition to our team. Please join me in welcoming him aboard full-time!
From the Portfolio Manager
Stocks in the casino industry have been the recipients of an ever-increasing amount of media attention. While the majority of this attention has been focused on the red-hot Las Vegas market, the reality of the situation is that revenues have been significantly increasing at gaming operations nationwide. Stable economic growth, rising levels of discretionary income, and the increasing popularity of poker have driven traffic to gaming locales from coast to coast. Seeking to capitalize on emerging industry and company-specific developments, we recently added Harrah's Entertainment (HET) to our holdings in the media and leisure sector. 
The company's recent acquisition of Caesars Entertainment vaults Harrah's back past MGM Mirage to reclaim its status as the world's largest casino operator. The combined entity will generate $9 billion in annual revenue from its 40 properties scattered across 12 states and 3 countries. Unlike MGM, whose lavish, amenity-rich casinos draw high rollers and conventioneers, Harrah's focuses on frequent, small-time players. Since these gamers are less costly to lure, Harrah's returns on capital are among the industry's best. Additionally, Harrah's cross-marketing promotions represent a significant competitive advantage. The combination of the company's highly targeted marketing campaign and Total Rewards program, which encourages customers to visit its properties regardless of their location in the country, continues to yield significant results. Cross-market play (gaming by customers away from their "home" casino) surged 18% in 2004 and accounted for 30% of total revenue. With the recent acquisition of Caesars, we believe these promotions will be even more successful, as the network nature of Harrah's business model should enhance performance at Caesars' lagging properties. The acquisition will also enhance Harrah's presence on the Las Vegas Strip, which was previously a weak link in the company's cross-market play network. The deal also increases the company's presence in Atlantic City and Mississippi, two large gaming markets with relatively stable tax environments. In addition to the Horseshoe Gaming acquisition a year earlier, which gave Harrah's three top-performing properties in Middle America, the Caesars acquisition greatly improves the company's already diverse geographic footprint.
While the additional Vegas properties should boost earnings growth in the near-term, we nonetheless view Harrah's geographic diversity as a source of strength over the long-term. Furthermore, valuations remain reasonable, especially relative to its peers, while the company continues to generate substantial cash. Historically, the firm has returned much of this cash to shareholders through stock buybacks and a solid dividend.
Condor Capital Featured in Bloomberg Wealth Manager
As you know, we strive to differentiate ourselves by providing outstanding service to our clients. Since I founded the firm, I have believed strongly that technology can be leveraged to help achieve this goal. Some of the information technology is visible to our clients in the form of our website, providing access to all your accounts 24 hours a day, 7 days a week; our quarterly statements, with their many reports and analyses; and our newest addition, this newsletter. Other IT segments are hidden behind the scenes, adding to the operational efficiencies that allow us to effectively serve our clientele and process your requests quickly. In a recent issue of Bloomberg Wealth Manager, Condor Capital was featured as an example to the rest of the wealth management industry of how to effectively harness the value of technology in an RIA. I invite you to read the attached article.
