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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 start with Harrah’s. What is the case for Harrah’s?

Mr. Forst: Most analysts agree that Harrah’s (NYSE:HET) has terrific geographic diversification and an outstanding national marketing program, called Total Gold. And for the most part, their properties are very consistent and highly profitable. They have two problem properties, one in New Orleans and The Rio in Las Vegas. Those two properties alone are probably the reason why the stock trades at a discount to its peer group.

TWST: Are these problems that will be resolved or can be resolved?

Mr. Forst: That is part of my scenario. The problems will be resolved some time in the next six months. I think that the New Orleans property will be offered a substantial tax relief if the company can work out a deal with the State of Louisiana and the City of New Orleans. One way or another, those losses will be greatly diminished, if not removed entirely.

TWST: For the investor who buys Harrah’s today, what kind of time frame should he or she be thinking in terms of?

Mr. Forst: I would like to look at a 12-month time frame. I think by the end of next year the stock has a good likelihood of being in the $40 range, assuming that there is a normal investment environment in the general sense.