Friday, July 31, 2009

Las Vegas Sands (LVS) - Disappoints Again

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Part of investing is pure luck, anyone who tells you otherwise is a liar. I have been alternating my short exposure to the casinos between Las Vegas Sands (LVS) and Wynn Resorts (WYNN). Wynn is actually a company I like and has a great operator at the helm, and is nowhere near as bad a shape as MGM or Las Vegas Sands (who have immense debt loads). In fact I'd like to be LONG Wynn Resorts at appreciably lower prices. (if valuation mattered WYNN would be considered very expensive) I am simply going off charts - in this case both had a similar set up a few days ago. Further, Las Vegas Sands - when it moves against you - really causes a lot of pain. Usually it and MGM have moved in almost double the multiple of WYNN (up or down).

Two weeks ago we "won" and "lost" in back to back trades 7% in shorting Las Vegas Sands - net flat. This time around I put my chips on black, instead of red and went with Wynn Resorts. Notwithstanding I should of done NOTHING ahead of earnings reports (which I just completely missed in the case of WYNN), I crapped out on this one. If I had gone to my other horse: LVS - I'd be looking much more smart in this trade.

"Black"

"Red"

Las Vegas Sands results: Ironically they "beat analysts estimates" but still cratered.
  • On Thursday, Las Vegas Sands said it lost $175.9 million in the second quarter. Adjusted profit of a penny per share beat expectations for a loss of 1 cent per share.
  • Shares of Las Vegas Sands Corp. dropped in premarket trading Friday as analysts expressed concern about its capital position and a challenging Las Vegas market.
  • "We are still uncomfortable in LVS's capital position going forward and need more evidence that a capital raise is in the near future," Stifel Nicolaus & Co. analyst Steven Wieczynski said. "A disconnect remains between their debt balance and what their asset are actually worth that will likely not close until 2011 and beyond," Wieczynski wrote.
Not that those concerns matter one iota to people who have been running into the stock, scorching shorts for months on end.
  • Also, the slow economy slowed traffic at casinos, a trend that may continue to hurt results.
Uhh, "Technical Recession" over - GDP will be positive next Quarter, time to fly to Vegas to celebrate the fact.

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In this case the house won. (so far) If the market ever corrects again I still believe I can "wynn" here. But I would of prefered the much easier road with Las Vegas Sands.

Short Wynn Resorts in fund; no personal position


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