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Why is Wynn Selling?

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It is clear that because of the company's significant investment in Macau, WYNN is yet another proxy for the China boom trade.

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Below is a missive from Minyan Peter, who has become quite popular around the 'Ville with readers and professors alike with pieces like A Bird's-Eye View of the Credit Conundrum and Brave New World for Debt Issuers.


Late last Thursday, Wynn Resorts (WYNN) sold 3.75 mln shares. With the over-allotment exercised, WYNN will net just over $700 mln in proceeds. Per its press release, the use of proceeds is general corporate purposes and to enhance financial flexibility for future projects and potential new developments.

As I have written before, there are only two times you issue (debt or equity) securities: a) when you absolutely have to or b) when you are stupid not to. Judging by WYNN's stock performance (up almost 100% since mid-July) as well as the use of proceeds, I would have to put this transaction in the latter category.

Like Sam Zell in real estate or Steve Schwartzmann in private equity, I believe Steve Wynn represents best in class for his industry. And when I see people like him selling I sit up and ask why.

Looking at research reports on WYNN, it is clear that because of the company's significant investment in Macau, WYNN is yet another proxy for the China boom trade. And when you plot WYNN's performance against FXI, the relationship becomes even more transparent.


Click here to enlarge.


Conventional wisdom states that the Chinese stock market will not peak until after the 2008 Olympic games. And up until last Thursday I bought into that.

But as they also say in Las Vegas and Macau, you don't bet against the house – especially when the house is Steve Wynn.

Admittedly, I am just a banking person, but it does make you wonder.
Position in FXI.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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