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

Summary

• Hawkins Entrekin’s core pitch: United Parks, owner of SeaWorld and Busch Gardens, is a hard-asset business throwing off “a little over an 8% yield” unlevered after all capex, or an 11.75% implied NOI yield on his real-estate framework — versus upper-3s/4% for multifamily. With management pushing essentially 100% of free cash flow into buybacks, modest 1.5% NOI growth gets the implied cap rate to “almost 15%” in four years even with no catalyst: Hawkins has “always liked owning the cash flow.”
• The squeeze kicker: Hill Path Capital owns roughly two-thirds of the stock, so adjusting for passive holders, effective short interest peaked in the mid-80s percent of float and still sits around 80%. Andrew notes Bloomberg’s squeeze score is 93 out of 100; a Q2 earnings beat after a soft Q1 “could be possibly a catalyst,” though Hawkins treats the squeeze as cherry, not thesis.
• The bear case is real — EBITDA fell from ~$730M (2022) to ~$600M (2025) despite inflation — and Hawkins’ best estimate is new supply from Universal’s $7B Epic Universe, combined with possible residual COVID whiplash, absorbing national destination demand. Andrew calls it “basically the entire EV of this business” for that one park. He pushes back that Comcast is still ramping Epic capacity through end-2026 and Disney keeps expanding, asking whether “SeaWorld’s almost like the excess capacity”; Hawkins counters with the $60-70 ticket versus “well in the hundreds,” and pass sales (~40% of traffic) up ~12% YoY.
• Andrew’s management worry: the company has blamed weather in 15 of the past 16 quarters (25 of 40 over a decade, credited it once) and its 2026 deck spent ~5 of 17 pages on how undervalued the stock is — is it “run for me and you, not for long-term operations”? Hawkins’ tell is capex: United Parks is spending mid-13s% of revenue, roughly its pre-COVID norm and well above the 6% third-party minimum, whereas the Six Flags park sale ($330M, $45M EBITDA, 7.3x) suggests the buyer may plan to slash capex to 6% — cutting capex is “the easiest button to push, and they don’t appear to be pushing it.”
• Fair value: low $80s per share — an 8.5% cap rate, ~11x conservatively declining EBITDA — versus a $4.5-4.6B EV, $2.4B market cap, ~$400M unlevered FCF, and $480M of 2024 buybacks. Blackstone paid ~12x for Merlin and 14-15x for Great Wolf pre-COVID while United Parks and FUN both trade near 8x; Hawkins calls it a “baby with the bathwater” orphaned asset with no natural REIT buyer, trading below even his conservative $6.3B replacement cost (management claims ~$10B).
• The event path has a built-in clock: Andrew thinks Hill Path is restricted from going over 70% ownership absent a shareholder vote, and Hawkins says buybacks reach that limit in a little more than a couple of years because beneficial ownership does not count against it — “there’s almost a forcing mechanism.” Hawkins pours cold water on a public OpCo/PropCo split (“financial engineering for financial engineering’s sake,” Andrew agrees) but sees a tax-advantaged take-private that “real-estate-izes” the deal, or a sale to strategics — United Parks bid for Cedar Fair ~3 years ago; Merlin and ex-owner Blackstone fit. Worst case: a 12%+ AFO yield in four years and eventual dividends.
• Andrew’s meta-caution — this exact pitch appeared on VIC in 2024 at $60 and again in mid-2025 at $50; TIKR showed the stock around $50 in September 2025: “did it work for them? No. But maybe it worked for us.” The difference from the cable and retail lever-buyback disasters (“I love levered buybacks — but do levered buybacks love me? No, not really”) is that Andrew thinks theme-park EBITDA cannot fall off a cliff: “It’s a theme park. People are not going to stop going to theme parks.”

Deep dive

1. The setup: an 8% hard-asset yield wrapped around an ~80% effective short

• Hawkins’ framing, from his real-estate background: value United Parks like property. Applying a 6% capex reserve (the minimum third-party operators require, similar to hotels) and a modest G&A load yields an 11.75% implied NOI yield — “extraordinarily high for a real estate asset” — while plain unlevered cash flow after all capex runs “a little over an 8% yield,” versus upper-3s/4% for multifamily, “the vanilla gold standard” in private markets.
• The degeneracy angle: Hill Path owns essentially two-thirds of the stock, so adjusted for passive ownership the short interest hit the mid-80s percent of float and is “probably still kind of 80%-ish effective.” Andrew: Bloomberg’s squeeze score is 93 — “about as high as it gets.”
• With essentially 100% of free cash flow going to buybacks, Hawkins argues the position compounds even catalyst-free: 1.5% annual NOI growth makes the implied cap rate “almost 15%” in four years. And on demand: “what else are we going to do with our leisure time once AI automates all the jobs except go to SeaWorld and Disneyland?”
• Andrew’s confessed ambivalence up front — the setup is “catnip to me… levered buybacks, irreplaceable assets, consistent cash flow, majority hedge-fund owner,” but these are also the situations that blow up: “everything looks so good on a spreadsheet… and there’s just a fire over there in the actual business.”

2. Why is EBITDA down $130M? Hawkins’ best guess: Epic Universe plus COVID whiplash

• The numbers Andrew anchors on: EBITDA ~$730M in 2022, ~$700M in 2024, ~$600M in 2025 — in inflationary years, when a park with assets “in the ground” should at least pass on inflation. Six Flags has been soft too.
• Hawkins’ honest non-answer on the shorts: “I frankly struggle with that a bit” — his best guess is linear extrapolation of the earnings decline, which he thinks is wrong; notably raw short interest has fallen from ~67 to ~61 over the past 30 days.
• Hawkins’ proposed explanation is Universal’s Epic Resort in Orlando — a $7B investment, “the entire EV of this business basically, for that one park” — plus a possible residual COVID bullwhip. Because SeaWorld is part destination, the absorption is national, not just Orlando.
• Andrew thinks the shock is one-time: “No one’s building any more big parks, given performance today,” though he allows that could change eventually; he thinks the impact has now been digested.

3. Andrew’s pushback: capacity keeps coming, and SeaWorld may be the marginal loser

• Andrew notes Comcast says it is intentionally rationing Epic, with capacity increasing through end-2026, and Disney World has a Villains Land and constant expansion coming — so is SeaWorld “almost like the excess capacity… as soon as the good stuff comes up, people are going to the good stuff?”
• Hawkins’ distinction: greenfield mega-parks that create net new visits versus “reimagining a tired part of an old park,” which everyone — SeaWorld included — does constantly. Epic is the former; Hawkins characterizes the Disney items as mostly the latter. United Parks also has a pricing differentiator: “$60, $70 for a ticket versus well in the hundreds” at Epic or Disney.
• His comfort blanket: pass sales, ~40% of overall traffic, up something like 12% year-over-year despite the soft Q1 — “it’s hard for me to see passes performing that strongly and having a really big disaster year.”

4. Management quality: weather excuses versus the capex tell

• Andrew’s receipts: management has blamed weather in 15 of the past 16 quarters and 25 of the past 40, crediting it exactly once. Combined with the Six Flags cautionary tale — Hawkins may be misremembering the details, but recalls PE-optimized pricing followed by CEO turnover and a full pricing reset — and a 2026 deck that spent roughly five of 17 pages on how undervalued the stock is, he worries the company is “run for me and you, not for long-term operations.”
• Hawkins’ twofold answer: first, this asset class resists “too much bozo-ness” — “the park is the park… it takes quite a bit to ruin the thing.” Second, the place stripping shows up first is capex, and United Parks is spending mid-13s% of revenue, roughly its pre-COVID average and far above the 6% minimum.
• The load-bearing comp: Six Flags just sold a couple of parks at $330M / $45M EBITDA — 7.3x — but at a 12% capex assumption that’s ~24x net cash flow and at 13% it’s ~30x. Hawkins thinks those economics suggest the buyer/operator may slash spending to the 6% third-party minimum. “That’s the easiest button to push… and they don’t appear to be pushing it.”
• Lighter beat on the new SeaQuest: Legends of the Deep submersible ride at SeaWorld Orlando — Andrew can’t believe the safety profile; Hawkins: “What’s life without a little danger? You’ve got risk of a submarine implosion.”

5. Real estate angles: cold water on OpCo/PropCo, modest upside from excess land

• Hawkins won’t underwrite the split many push at Six Flags (where “Travis Kelce… partnered with Jana — Travis, you’re invested in the wrong theme park business”): given required 2x EBITDA coverage, he can’t see a cap rate below 7%, and the capex burden crushes the OpCo multiple — “I don’t think there’s much upside, if any” unless you get to a 6-6.5 cap.
• The exception is a take-private: a single owner can size the rent freely, route cash flow tax-advantaged through the REIT and leave the OpCo with basically no taxable income after depreciation — “a private owner could effectively real-estate-ize this deal” and eliminate the C-corp bleed.
• Andrew’s agreement via casinos: if Caesars stumbles, a casino PropCo can re-tenant; sell SeaWorld Orlando to a REIT and “SeaWorld has them over a barrel” — there is no other real operator. In public markets it’s “financial engineering for financial engineering’s sake.” Hawkins: “Agree.”
• On the ~40 acres of excess land at each park: “a couple hundred million dollars” of monetization at most — a 10-30% bonus to the stock, not in his base case; the hospitality development market isn’t there today but hotel JVs over five years would be “a win-win,” monetizing land while driving traffic.

6. Valuation: low-$80s fair value on an orphaned asset below replacement cost

• Andrew’s tape: $4.5-4.6B EV against $2.4B market cap, ~$400M unlevered FCF, $480M of buybacks in 2024, nearly $100M in Q1 and $160M in 2025. Andrew also probes the NOI methodology — half the G&A is advertising, “so clearly crucial” — and Hawkins agrees only a small, REIT-comparable slice gets added back: advertising “is very much not an add-back.”
• Hawkins’ fair value is low-$80s per share — an 8.5% cap rate, “right in the fairway of what hotels trade for,” ~11x on his conservatively declining EBITDA or a bit over 10x on flat $600M. Pre-COVID these traded closer to 12x; Blackstone paid ~12x for Merlin and ~14-15x for Great Wolf, while United Parks and FUN both sit near 8x today.
• Why the gap? Rates are “a little bit of it,” but mostly a “baby with the bathwater” dynamic: entertainment assets were “absolutely smashed” since COVID, and there is no natural REIT buyer like hotels have. “I think that’s what Hill saw… screw it, we’ll accrue the value to ourselves with these massive buybacks.”
• Replacement cost: the company claims ~$10B; Hawkins builds ~$6.3B using a recent LEGOLAND he believes is in upstate New York or the Hudson Valley-ish area as his construction comp — conveniently right at his fair value. Andrew’s refiner war story on why the angle matters, and Hawkins’ rule: “It never trades right at it… it goes below and then it goes over, and it’s hardly ever right at that number.”

7. Hill Path’s endgame: a forcing mechanism within a few years

• Hill Path has been in ~10 years at a ~$21-22 cost basis versus $48 today — “nice, but it’s not a grand slam” — and United Parks is “by far and away their largest asset”; Hawkins says it is more than half theirs, as far as he can tell. Andrew thinks Hill is restricted from going above 70% ownership absent a shareholder vote, while Hawkins says beneficial ownership does not count toward that limit, putting the timing at a little more than a couple of years.
• Hawkins’ preferred paths: after a squeeze, the cleanest is a take-private — real-estate-like cash-flow stability plus the tax structure — and it’s “economically rational” for Hill to let the company buy at $45-47 if the takeout is $80. Andrew adds strategics: United Parks bid for Cedar Fair ~3 years ago, Merlin fits, and ex-owner Blackstone knows the assets; Andrew believes Delaware incorporation offers minority protection if Hill plays rough at 70%.
• The floor Hawkins actually underwrites: “worst case they just buy back all these shares — in four years you’re doing a 12%+ AFO yield and they’ll have to start paying dividends at some point… I’m sort of happy with that.”

8. The attendance puzzle and the dead-money question

• Andrew’s uncomfortable stat: attendance was 21.22M in 2025 versus 22.6M in 2019 and a 25.4M peak in 2008 — Andrew characterizes that as down ~20% over 17 years while America grew. “I just look at that number and say, hey, what the f?” Hawkins: price maximization “perhaps at the expense of attendance,” the explosion of at-home entertainment, and demographics — though SeaWorld’s parks sit mostly in high-growth states, with California the exposed one.
• Andrew’s second set of receipts: the essentially same pitch appeared on VIC at ~$60 in 2024 and ~$50 in mid-2025; TIKR showed the stock around $50 on September 15, 2025 — “did it work for them? No. But maybe it worked for us.”
• Hawkins embraces the early-but-right pattern and returns to the clock: “based on the buybacks alone, something’s got to happen in the next three or four years, because they’re going to retire basically all [the shares] very soon… there’s almost a forcing mechanism.”

9. Why this lever-buyback shouldn’t blow up like cable and retail did

• Andrew’s self-diagnosis: “I love levered buybacks — but do levered buybacks love me? No, not really.” His blowups shared a pattern — cable looked stable until fixed wireless, retailers bought back stock hand-over-fist until “Amazon came and ate all their earnings.” Here he can’t picture two people in these seats in 15 years saying SeaWorld isn’t around.
• Hawkins’ through-line: “It’s a theme park. People are not going to stop going to theme parks.” Hard assets “very rarely undergo major shifts” — a few times every 20-40 years (work-from-home, e-commerce) — and on screens, “until we get to the Matrix level, jacks in your neck, we’ve probably hit maximum screen consumption,” with people pushing back toward IRL.
• A genuinely interesting tangent: Class B/C retail’s revival rests on “barely a shopping center built since about ‘06” plus collapsing digital ad economics — “in 2015 you could get like a 5x ROAS on Instagram ads; now Facebook has marked up prices so much there’s no more juice” — making physical channels competitive again; Hawkins wouldn’t be surprised if retail “regains its throne” among real-estate asset classes within 10 years.
• Closing housekeeping: Hawkins’ new site and firm, Valite, and its United Parks write-up are linked in the show notes. The conversation then riffs on why liquidations (including Seritage and ELME’s D.C. multifamily assets, where cap rates have been “surprisingly soft”) are far less NAV-friendly than takeouts.