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Casino magnate and businessman Tilman Fertitta, whose company owns the Golden Nugget casino brand substantially increased his stake in Wynn Entertainment recently. That news caused a flurry of rumors as to whether he might have plans to take an active role in the company’s strategy at some point in the future.
Could Fertitta push for Wynn to adopt Golden Nugget’s approach?
Once the news broke that Fertitta had increased his shares in Wynn, rumors flew that he would take an active role in the company’s functions, considering his nearly 10% stake.
Buying a decent minority stake in a company and leveraging it to change the company is “activist investing” and it’s something CNBC’s David Faber said Fertitta might be planning to do.
What would Fertitta’s influence on Wynn look like? CBRE Equity Research Analyst John DeCree noted initial reactions were that Fertitta was thinking about expanding the Wynn brand across the country. That would be a big deal if you’re in any major city that’s not Las Vegas or Boston (Wynn’s two US hotel-casino locations) that has legal gambling.
For example, a Wynn expansion to casino markets in other cities could mean a Wynn property in Atlantic City or another gambling hot spot.
That’s all speculation, of course, and it’s speculation that DeCree shut down, per the Las Vegas Review-Journal. DeCree said he believes Fertitta is in it purely for the investment and not, at the moment, a takeover:
If Fertitta would make a play for the company, we would be shocked if he were uncontested. We suspect numerous suitors would come out of the woodwork.
However, Fertitta has positioned himself at the head of the negotiating table as the largest shareholder of the company. For now, we view his stake in the company as a fundamental investment in an undervalued company with generational assets that will endure economic cycles.”
A quick profile of Wynn Resorts
Wynn has two properties in the United States: one in Las Vegas and one in Boston. Both properties have a stunning profile on the city skyline and boast an elevated experience.
However, as casino-hotel brands go, Wynn is a minor player in a landscape where brands like Boyd Gaming have dozens of properties across the US. Even Golden Nugget has three times the properties Wynn does.
Wynn Resorts’ stock price (NASDAQ: WYNN) has been up and down over the past year, falling to $71.63 this summer after closing at a 52-week high of $107.46 in April. Year-on-year, the stock price is up slightly thanks to a boost after the Fertitta investment.
