Tilman Fertitta Takes 6.1% Stake in Wynn Resorts

Posted on: October 31, 2022, 09:30h. 

Last updated on: October 31, 2022, 02:59h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Tilman Fertitta’s Fertitta Entertainment includes the Golden Nugget casino empire. But the billionaire businessman is investing in rival Wynn Resorts (NASDAQ: WYNN) as well.

Fertitta Wynn
Billionaire businessman Tilman Fertitta. He took a 6.1% stake in Wynn Resorts. (Image: Bloomberg)

A Schedule 13G filing with the Securities and Exchange Commission (SEC) indicates Fertitta Entertainment, Fertitta himself, and another entity earlier this month purchased 6.91 million shares of Wynn, equivalent to 6.1% of the casino operator’s shares outstanding.

The amount of Common Stock reported as beneficially owned above includes (i) 6,808,126 shares of Common Stock that are beneficially owned by Hospitality Headquarters, Inc.; (ii) 10,000 shares of Common Stock that are beneficially owned by Fertitta Entertainment, Inc.; and (iii) 99,425 shares of Common Stock that are beneficially owned by Mr. Fertitta,” according to the regulatory document.

The Houston Rockets owner is the lone shareholder of Fertitta Entertainment, Inc. and Hospitality Headquarters, Inc. The 13G filing indicates a passive stake, meaning Fertitta is unlikely to be pressing Wynn for change. A 13D is the regulatory form required of activist investors. While his investment in the Encore operator is passive, market participants nonetheless cheered the news, sending shares of Wynn higher by more than 8% in early trading.

Fertitta Wynn Bet Could be Value Play

The 13G doesn’t require filers to disclose why they’re taking stakes in a company, and Fertitta doesn’t comment to that effect in the document.

It’s possible that he’s making a value wager on Wynn Resorts, as the stock is down 31.47% year to date. That tumble is almost entirely attributable to weakness in Macau — the company’s largest operating market. Like other integrated resorts there, Wynn Macau and Wynn Palace have been hampered by ongoing coronavirus restrictions. Conversely, its Las Vegas Strip properties and Encore Boston Harbor are thriving.

In a standard operating environment, the special administrative region (SAR) drives roughly two-thirds of Wynn’s revenue and earnings before interest, taxes, depreciation, and amortization (EBITDA). That makes the company one of the most China-sensitive non-technology corporations in the US.

By buying Wynn stock, Fertitta is also betting the operator will have its Macau license renewed. The special administrative region’s (SAR) retendering process is ongoing. But there are seven bidders for six permits, and it’s possible an established concessionaire is left out of the fold when all is said and done. As of yet, there are no indications Wynn could lose its Macau permit.

Fertitta Could be Wynn Competitor

Fertitta could eventually be competing with Wynn on the Strip, as the investor is planning a new integrated resort on 6.2 acres at Las Vegas Boulevard and Harmon Avenue he recently purchased. That will be his first venue in that area.

The five Golden Nugget casinos are located in downtown Las Vegas and Laughlin, Nev., Atlantic City, Biloxi, Miss., and Lake Charles, La., and the operator has a pending acquisition in Colorado, along with plans to build a new gaming property in Illinois.

Fertitta’s company also owns more than 600 restaurants across numerous brands, including Bubba Gump’s, Chart House, Del Frisco’s, Mastro’s, and Morton’s.