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TWST: Dennis, you have recently broadened your coverage to include the restaurant sector. Do you view gaming and restaurants as entirely different sectors, or are there certain common investment characteristics that these two sectors share?

Mr. Forst: There really aren't common investment characteristics. Both are dependent on disposable income, and they are both, broadly defined leisure time activities, but I would not say that the investment characteristics are particularly close. Both industries are dependent on building new capacity and making the highest IRR on that capital, but that's about as far as it goes.

TWST: Let’s begin with the approach that you’ve taken to the restaurant industry.

Mr. Forst: It is probably no different from what most investors and analysts are looking at. It includes looking at the long-term viability of a concept, looking at the investment return on individual restaurants, looking at the quality of managements. The restaurant industry is one of the largest industries in the United States and it’s not going to go away. It’s growing at a faster rate than inflation. However, it is a highly speculative business. There is probably as much failure in this industry as in any industry I’ve ever looked at. In the short term, it is very fast moving and a lot of it depends on fads, promotions and advertising.

TWST: What distinguishes the long-term winners in this industry?

Mr. Forst: You need to have a quality management team that can build new restaurants. You cannot succeed long term without expanding, but you also have to have a very consistent, long-term operating focus. A lot of interesting concepts come and go because they are not executed well. Execution is probably more difficult than arriving at a viable concept. In fact, there are viable concepts that come up, and people steal the concept or knock them off and are sometimes more successful than the originator, because they can operate them.

TWST: Let’s move on to Brinker (NYSE:EAT), which was the darling of the restaurant analysts until it fell out of favor, and now it seems to have been reborn.

Mr. Forst: Yes, it’s working its way back. I consider Brinker the king of casual dining. The company more or less invented the sector with Chili’s. Additionally, Brinker is the only company that has had success with multiple concepts long term. They have had some failures, but for the most part they have had more successes, whether with Macaroni Grill or more recently with Maggiano’s, or trying out many of their 10 different concepts in various levels of incubation. The comps have been very strong in their two key concepts, and therefore earnings have been beating expectations on a regular basis. Three or four months ago the shares were exceptionally cheap, and it has been one of the better performing stocks the last couple of months. In fact, in October it was up 30%. Year-to-date, it is up 63%.

TWST: Can investors still buy the stock, or is it too expensive?

Mr. Forst: Yes, I think so. I think you have to take a longer-term viewpoint. We think that they can grow earnings between 15% and 20% — let’s say somewhere in the middle: 17%, 18% for the next three to four years. The stock is trading at around 17 times next year’s earnings. So we’re not averse to having long-term, core investors buy the stock right here.