$PRKS: SeaWorld, an 8% cash yield, and a possible 80% short squeeze | Hawkins Entrekin

Episode Summary

Executive Summary: The episode centers on Hawkins Enchkins' bullish thesis on United Parks & Resorts (SeaWorld/Busch Gardens), framed as a hard-asset, cash-generative business trading at a depressed valuation despite buybacks, high short interest, and possible corporate actions. The hosts debate whether declining attendance/EBITDA reflects temporary supply and competition effects or a deeper structural problem, ultimately concluding the stock’s downside may be cushioned by asset value and capital returns.

Main Topics: United Parks as a hard-asset investment (Priority: 5/5): Hawkins pitches Parks like a real-estate-style asset: scarce, hard-to-replicate theme parks with durable cash flow and meaningful replacement cost support. Valuation and cash flow yield (Priority: 5/5): The discussion emphasizes a very high implied cash yield, substantial free cash flow, and buybacks as the key drivers of potential upside even without multiple expansion. Competitive pressure and earnings decline (Priority: 5/5): The hosts examine why EBITDA and attendance have fallen, focusing on new supply from Universal Epic Universe, Disney reinvestment, and possible post-COVID normalization. Short interest and squeeze optionality (Priority: 4/5): A major side catalyst is unusually high short interest, amplified by concentrated ownership and ongoing buybacks that reduce float. Management behavior and capital allocation (Priority: 4/5): They debate whether management is prudently preserving and refreshing the parks or over-financializing the business with shareholder-friendly rhetoric and weather excuses. Real estate monetization and structural options (Priority: 4/5): The conversation covers excess land, hotel/JV opportunities, and whether an opco/propco split or take-private would unlock value. Hill Path ownership and event risk (Priority: 4/5): A concentrated owner with ~60% stakes creates both a potential catalyst and an overhang, as buybacks could push them toward ownership limits and force a decision.

Key Arguments: United Parks is cheap on a real-asset basis: Hawkins argues the stock trades at an unusually high implied yield for a hard asset and near or below replacement cost. Even if growth is modest, the company is returning nearly all free cash flow via buybacks, so per-share value should compound over time. The recent EBITDA decline is more likely explained by temporary competitive supply (especially Universal Epic Universe) and post-COVID whiplash than by permanent structural decay. Short interest is very high, but the more important point is that buybacks shrink float while a concentrated owner already controls most of the stock, increasing event-risk optionality. Management’s biggest risk would be underinvesting in the parks, but current capex appears roughly normal rather than stripped down. An opco/propco split is probably not attractive in public markets, though it could make sense in a private take-private due to tax efficiency. Excess land and adjacent development could add value over time, but Hawkins does not underwrite that upside in the base case. A take-private, strategic sale, or forced ownership-limit event could be the cleanest path to realizing the gap between market price and intrinsic value.

Data Points: Hill Path ownership: ~60% - Concentrated ownership by Hill Path Capital is a major feature of the stock's event-driven setup. Effective short interest: 70s to mid-80s % - Short interest is described as extremely high after adjusting for passive ownership. Bloomberg short squeeze score: 93/100 - Used to illustrate how elevated the setup is versus typical public equities. Implied yield: 11.75% - Hawkins' real-estate-style cap-rate view of the business on an implied yield basis. Unlevered cash yield after capex: just over 8% - Another measure of cash generation after reserves/capex, supporting valuation. EBITDA 2022: ~$730 million - Referenced as a higher historical earnings level before recent declines. EBITDA 2024: ~$700 million - Used in the conversation as a rough recent benchmark. EBITDA 2025: ~$600 million - Discussed as the current/underwritten conservative level showing the decline. Capex as % of revenue: mid-13% - Hawkins says current capex is around pre-COVID levels, implying normal maintenance/investment. 2024 share repurchases: $480 million - Shows aggressive capital return via buybacks. Q1 2025 share repurchases: ~$160 million - Indicates buybacks continued into 2025. Q1 2025 share repurchases (alternate mention): almost $100 million - A separate quick reference in the dialogue to buybacks in the quarter. Market capitalization: ~$2.4 billion - Provides scale of the equity versus cash flow and buyback activity. Enterprise value: ~$4.5-4.6 billion - Used in valuation discussion against EBITDA and free cash flow. Free cash flow: ~$400 million - Rough unlevered free cash flow estimate after capex. Attendance 2025: 21.2 million - Compared against prior years to question whether demand is structurally weakening. Attendance 2019: 22.6 million - Pre-COVID benchmark for park traffic. Peak attendance: 25.4 million - 2008 peak attendance, used to highlight long-term decline. Six Flags asset sale: $330 million sale, $45 million EBITDA - Illustrates low apparent cash yield for some park assets under current structures. Six Flags third-party maintenance capex floor: 6% of revenues - Used as a comparison point for capex requirements and cash flow economics. Fair value estimate: low $80s per share - Hawkins' base-case valuation target, framed as about an 8.5% cap rate.

Pivotal Quotes: "we all should have just been YOLO long, Vernado, Vernado Press, whatever" — Andrew Walker: Opening joke referencing Hawkins' prior successful real estate pitch and the theme of hindsight value investing. "I view the business as a real estate business really sort of as it is today" — Hawkins Enchkins: Core framing of United Parks as a hard-asset / cash-yield investment rather than a purely operating company. "what else are we going to do with our leisure time once AI automates all the jobs except for go to, you know, SeaWorld Disneyland, right?" — Hawkins Enchkins: Bullish long-term demand argument tying parks to rising leisure time in an AI-enabled economy.

Implications: The stock hinges on whether cash flow and buybacks can outrun modest earnings pressure. If attendance stabilizes and ownership/event catalysts emerge, the upside could be large; if not, investors still may be paid to wait by cash returns and asset value.