However, Red Rock Resorts, Inc. (RRR, Financial) continued its strong stock performance in the quarter and increased another 30% on reported EBITDA 20% above pre-pandemic levels on a complete recovery in revenue. Management indicated it believes the margin expansion is sustainable given current revenue and a reimagined cost structure. This robust cash generation combined with the $650 million sale of its Palms casino, which is slated to close by the end of 2021, should help significantly improve the company’s balance sheet. While Delta variant concerns are a negative, we believe this to be short lived and will have little impact on casino visitation. In our opinion, state governments will not return to statewide lockdowns given lower infections, hospitalization rates, and increased vaccine penetration levels.
From Ron Baron (Trades, Portfolio)'s Baron Focused Growth Fund second-quarter 2021 letter.
