Trump and Vices

By Dian Vujovich

When I first read about The Donald’s casinos filing for bankruptcy, I was surprised. I’d always thought tough times were good for casinos and those with a love of gambling and booze. Turns out, that ain’t necessarily so.

First, let’s look at the Trump casino situation.

Last month, Trump Entertainment Resorts filed for Chapter 11 bankruptcy protection. It runs three Atlantic City gambling resorts. Couldn’t help but laugh when I read that Mr. Trump resigned as chairman of the board from the company four days before it filed for bankruptcy, according to the Huffington Post.com (http://www.huffingtonpost.com/2009/02/17/donald-trumps-casino-comp_n_167474.html ) Oh that Donald and how he loves to time things.

To help me understand how and why casinos weren’t doing well I decided to call Charles Norton, portfolio manager of The Vice Fund. It’s a mutual fund that only invests its assets in aerospace, defense, gaming, tobacco, alcohol and beverage company stocks. Because of its narrow focus and the limited number of stocks in the portfolio, this fund isn’t suggested for those who a) want to invest in a broadly diversified mutual fund, or b) have an aversion to investing in what some consider sin-type stocks. Nor am I suggesting that you invest in it either, unless you’ve done your homework and find it to be a fit.

That said, if anyone knew the gaming and beverage market, I figured it would be Norton.

So I called him for an interview. You may read it in its entirety at http://www.allaboutfunds.com. (Look for it in the middle of the home page under “A Casual Conversation With…”) Till then, below is some of what I learned:

•Regarding smoking and gaming stocks, Norton said that the
demand for cigarettes is proving to be resilient but the gaming sector has “really collapsed” because it’s a very capital-intensive business at a time when capital is not available.

• As for booze companies, well domestic beers in the US are doing okay but imports not-so-hot.

• Then there’s The Donald’s casinos. Norton said that they’ve been in
trouble because, ” They were just sub-par relative to competitors, and, they just needed major up-grades. At the same time, they didn’t have the balance sheets to be able to do that.”

Something “sup-par” about The Donald’s touch? Wait until he hears that.

Read the rest of the story at
http://www.nytimes.com/interactive/2009/02/20/business/0222-pay-graphic.html?ref=business and weep.