Data Explorers review your bet
25 April 2012 London
Image: Shutterstock
The proposed EUR 18 billion ‘Eurovegas’ project typifies moves by the global casino operators to diversify beyond the mature U.S. market. Amid global economic uncertainty, securities lending data shows that both the long and short sides of the market are betting that consumers around the world will continue to their love affair with the global gaming operators.
Companies covered include: Wynn Resorts, Limited (NASDAQ:WYNN), Wynn Macau Ltd (HKG:1128), Las Vegas Sands Corp. (NYSE:LVS), Penn National Gaming, Inc (NASDAQ:PENN), SANDS CHINA LTD., (HKG:1928), MGM Resorts International (NYSE:MGM), MGM China Holdings Ltd (HKG:2282), Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL).
We see a consistent trend across the operators of casinos, regardless of whether their operations are based in the U.S. or the fast growing Asian markets. In summary, shorts covered positions sharply in the final quarter of last year and holdings of institutional investors who lend their shares have risen steadily, as the share prices of many of these names continue to power to fresh highs.
Las Vegas Sands Corp is in the process of courting favour from Spanish cities eager to secure the lucrative contract to build and host its proposed mega-casino which the Financial Times reports could be worth a staggering EUR 18 billion spanning 12 resorts, six casinos and 18,000 machines. The move follows the opening of its USD 5.5 billion Marina Bay Sands casino resort in Singapore which, despite costing 50% more than budget, generated the highest quarterly profit of any property in the company’s history. The Asian listing will open its fourth casino in Macau, the world’s largest gambling hub, and also the only city in China which permits casinos. The region now draws almost six times the revenue of the Las Vegas Strip with many of the global player having opened operations in the city.
Shorts aggressively covered positions in Las Vegas Sands Corp in October 2010 after the shares price more than doubled, with the percentage of stock on loan having fallen from 9% of the total shares to virtually nothing. Short interest has remained negligible since then, while institutional investors have increased their holdings in lending programs by a quarter. Having said that, they have recently pared back their stake by 10% to 80 million shares since the beginning of March while the share price has reached fresh annual highs. Short interest in the Hong Kong listing of Sands China, is very low at 0.5%, with shorts having covered positions from almost 1.5% back in October last year.
The U.S. listing of MGM Resorts International has followed a similar vein with shorts covering from the high of 14% of the total shares back in October 2010 to less than 1% today, well before the share price really took off in December last year. The WSJ reported that the fourth quarter earnings loss narrowed in February as the casino operator's resorts in Las Vegas shook off a brutal industry downturn and business in Macau continued to boom. Holdings of institutional investors who lend stand at fresh highs at 70 million shares or 19% of the total share capital. The Hong Kong listing of MGM China Holdings recently paid its first dividend and also sees very low levels of short interest at 0.2% of the shares, having fallen from almost 1% back in October last year, while institutional investor holdings have fresh highs of 80 million shares.
The trend is repeated in Wynn Resorts Ltd, which has seen short interest fall from 6% at the end of November to 1% today. This is despite the company’s board forcibly buying out the founder. However, institutional investors who lend have cut their stakes by almost a fifth to 23% of the company.
The Asian listing, Wynn Macau Ltd, breaks with consensus, having seen a doubling of short interest at the beginning of Q4 2011 which peaked at 3% of the total shares as the shares price fell from annual highs. It has since settled at 2.5%, which represents almost half of the shares that are available to be borrowed, as the share price has recovered almost half of its lost ground.
We see a similar theme with Penn National Gaming Inc. Short interest peaked last October at 6% and shorts have since covered to just over 2% as the shares have recovered losses and now trade just below two year highs.
Short interest in the Hong Kong ADR of Melco Crown Entertainment, which operates in Macau, was at a two year high of over 3% in December. The share price has since recovered and in the last two weeks shorts have reduced their positions from 2.5% to 1.5% of the total shares, after Goldman Sachs was reported to have increased its price target and improved its recommendation to a buy.
To view couple of graphs which accompany the article please visit Data Explorers website on http://www.dataexplorers.com/news-and-analysis/casinos-deliver-one-way-bet-investors
Companies covered include: Wynn Resorts, Limited (NASDAQ:WYNN), Wynn Macau Ltd (HKG:1128), Las Vegas Sands Corp. (NYSE:LVS), Penn National Gaming, Inc (NASDAQ:PENN), SANDS CHINA LTD., (HKG:1928), MGM Resorts International (NYSE:MGM), MGM China Holdings Ltd (HKG:2282), Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL).
We see a consistent trend across the operators of casinos, regardless of whether their operations are based in the U.S. or the fast growing Asian markets. In summary, shorts covered positions sharply in the final quarter of last year and holdings of institutional investors who lend their shares have risen steadily, as the share prices of many of these names continue to power to fresh highs.
Las Vegas Sands Corp is in the process of courting favour from Spanish cities eager to secure the lucrative contract to build and host its proposed mega-casino which the Financial Times reports could be worth a staggering EUR 18 billion spanning 12 resorts, six casinos and 18,000 machines. The move follows the opening of its USD 5.5 billion Marina Bay Sands casino resort in Singapore which, despite costing 50% more than budget, generated the highest quarterly profit of any property in the company’s history. The Asian listing will open its fourth casino in Macau, the world’s largest gambling hub, and also the only city in China which permits casinos. The region now draws almost six times the revenue of the Las Vegas Strip with many of the global player having opened operations in the city.
Shorts aggressively covered positions in Las Vegas Sands Corp in October 2010 after the shares price more than doubled, with the percentage of stock on loan having fallen from 9% of the total shares to virtually nothing. Short interest has remained negligible since then, while institutional investors have increased their holdings in lending programs by a quarter. Having said that, they have recently pared back their stake by 10% to 80 million shares since the beginning of March while the share price has reached fresh annual highs. Short interest in the Hong Kong listing of Sands China, is very low at 0.5%, with shorts having covered positions from almost 1.5% back in October last year.
The U.S. listing of MGM Resorts International has followed a similar vein with shorts covering from the high of 14% of the total shares back in October 2010 to less than 1% today, well before the share price really took off in December last year. The WSJ reported that the fourth quarter earnings loss narrowed in February as the casino operator's resorts in Las Vegas shook off a brutal industry downturn and business in Macau continued to boom. Holdings of institutional investors who lend stand at fresh highs at 70 million shares or 19% of the total share capital. The Hong Kong listing of MGM China Holdings recently paid its first dividend and also sees very low levels of short interest at 0.2% of the shares, having fallen from almost 1% back in October last year, while institutional investor holdings have fresh highs of 80 million shares.
The trend is repeated in Wynn Resorts Ltd, which has seen short interest fall from 6% at the end of November to 1% today. This is despite the company’s board forcibly buying out the founder. However, institutional investors who lend have cut their stakes by almost a fifth to 23% of the company.
The Asian listing, Wynn Macau Ltd, breaks with consensus, having seen a doubling of short interest at the beginning of Q4 2011 which peaked at 3% of the total shares as the shares price fell from annual highs. It has since settled at 2.5%, which represents almost half of the shares that are available to be borrowed, as the share price has recovered almost half of its lost ground.
We see a similar theme with Penn National Gaming Inc. Short interest peaked last October at 6% and shorts have since covered to just over 2% as the shares have recovered losses and now trade just below two year highs.
Short interest in the Hong Kong ADR of Melco Crown Entertainment, which operates in Macau, was at a two year high of over 3% in December. The share price has since recovered and in the last two weeks shorts have reduced their positions from 2.5% to 1.5% of the total shares, after Goldman Sachs was reported to have increased its price target and improved its recommendation to a buy.
To view couple of graphs which accompany the article please visit Data Explorers website on http://www.dataexplorers.com/news-and-analysis/casinos-deliver-one-way-bet-investors
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