Broyhill Asset Management's thesis on Cedar Fair

The amusement park industry is a clear-cut and easy to understand business model, an attribute we seek in all of our investments. Cedar Fair owns and operates amusement parks and generates almost all of its revenues from the sale of tickets in addition to food & merchandise. Unlike peers in the leisure industry, FUN’s revenues are incredibly resilient as its regional parks cater to recurring “day-tripping” visitors from the surrounding area rather than long-distance visitors to destination parks. As a result, the business enjoys a natural economic stabilizer during difficult times, as consumers cut back on more expensive vacations in favor of the value offered by amusement parks closer to home. We analyzed attendance records going back to 1990 and found only three instances where the industry’s head count declined, but only a single period in which revenues fell year over year. In each of these instances, the recovery in the following year made up nearly all of the lost ground. This is a very good business.