Big Sierra Winter
Best of
@favoritetakes
+1.8%
since Sep 29
The idea
I'm betting on a strong El Niño bringing a bigger Tahoe snowpack than last winter, and I built two layers to play it. On top are the businesses that cash the powder check directly: ski resorts, Reno-Tahoe casinos and lodging, and the ski, boot, and snowmobile makers whose season rides on snowfall. Underneath sit the quieter beneficiaries a deep Sierra snowpack helps but the market prices lazily, like California water utilities and hydro-heavy power companies.
What it owns
- Heavy snow drives lift ticket sales, casino visitation, and lodging bookings in the Tahoe region above last year's levels. · Vail ResortsIt owns Heavenly, Northstar, and Kirkwood resorts, so lift ticket sales and lodging revenue climb when Tahoe snowfall exceeds last year., Monarch Casino & ResortIts Reno casino sits at the base of the Tahoe ski drive, so strong regional snowfall pulls more visitors and gaming revenue to the property., AirbnbIt captures a large share of ski-town bookings around Tahoe, so an above-average snow winter drives higher occupancy and rates in the region., Caesars EntertainmentIt operates casino properties around Tahoe that fill when snow is deep and the ski crowd arrives, lifting gaming revenue above last season.25%
- Deep snowpack feeds hydroelectric generation through the summer and reduces wildfire risk during fire season in the Western power markets. · PG&E CorporationIt runs a large hydroelectric fleet in the Sierra, so a deep snowpack provides cheap generation through summer and reduces wildfire liability in a wet year., IDACORPIt runs hydroelectric dams fed by mountain snowpack, so a big Western snow year means cheap hydroelectric power instead of expensive purchased supply., Edison InternationalIts main risk is wildfire liability, which declines in a wet snowy year while markets still price the risk conservatively., Brookfield RenewableIt owns a large hydroelectric fleet that benefits from a wet Western winter, with steady earnings from other operations providing stability.22%
- Skis, boots, parkas, and snowmobiles sell through at full price when snow is abundant instead of being discounted as inventory clears in spring. · Amer SportsIt makes Salomon and Atomic skis and boots that sell when snow falls, with retail reorders climbing if this winter beats last season., Deckers OutdoorUGG boots are primarily sold during cold, snowy winters, so seasonal weather patterns drive its holiday and first-quarter sales., Columbia SportswearIt sells cold-weather jackets and outerwear whose sell-through improves when snowfall and cold exceed last year, clearing inventory and lifting reorders., PolarisIt sells snowmobiles whose demand tracks directly with how much snow is on the ground across the Sierra and Western region.21%
- Snowplow and road salt orders rise in proportion to how much snow actually falls through the season. · Douglas DynamicsIt makes snowplows whose orders track with snowfall, so a heavier winter than last year drives more replacement and wear-related buying., Compass MineralsIt sells road salt that gets consumed storm by storm, so heavier snow than last winter drives more salt buying and depletes municipal stockpiles., Toro CompanyIt sells snowblowers and snow equipment whose purchases rise when winter snowfall exceeds the prior year.12%
- Sierra snowpack fills reservoirs and lowers the cost and restrictions on water supply for utilities serving California. · California Water ServiceIt draws on Sierra-fed water supplies, so full reservoirs from a deep snowpack lower costs and ease drought restrictions for the utility., American States WaterIt benefits from wet years in California when surface water rises, pumping costs fall, and drought restrictions ease versus the prior season.11%
- Cash10%