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Wynn Resorts Is a New Addition to Bridgewater’s 4Q14 Portfolio

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Bridgewater Associates’ new stake in Wynn Resorts

Bridgewater Associates started a position in Wynn Resorts (WYNN) during the fourth quarter of 2014. The fund bought 74,659 WYNN shares worth $11 million. The position accounted for 0.09% of Bridgewater’s total fourth-quarter portfolio, according to the fund’s latest 13F filings.

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Overview of Wynn Resorts

Based in Nevada, Wynn Resorts develops, owns, and operates casino hotel resort properties through its subsidiaries Wynn Macau and Wynn Las Vegas.

WYNN generates revenues from food, beverages, entertainment, and retail operations at the company’s casinos and hotels. Casinos bring in 75% of WYNN’s total revenues. Food and beverages are responsible for 10% of total revenues, and hotel rooms contribute 8%.

4Q14 results 

In February 2015, Wynn declared its 4Q14 results. Net revenues totaled $1.13 billion compared to $1.51 billion in 4Q13. The decline was due to a 32% and 5.8% net revenue decreases for the company’s Macau and Las Vegas operations, respectively.

The company’s 4Q14 net revenues fell 16.9% from the prior quarter. Plus, revenues dropped 19.2% in Macau and 11.9% in Las Vegas compared to 3Q14. Lower VIP gaming activity and a decrease in the number of premium mass-market players have been negatively affecting Macau’s operations over the last two quarters.

For 2014, Wynn’s net revenues were $5,433.7 million, down 3.3% from $5,620.9 million in 2013.

In 2016, the company expects revenues to grow by 30% mainly due to Wynn Palace. The luxury resort should open in Macau during the first half of 2016.

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Macau’s gaming revenue outlook

Wynn’s Macau businesses see competition from the other 35 casinos in the region. These businesses must also contend with Asian counterparts such as Resorts World Sentosa and Marina Bay Sands in Singapore, Genting Highlands in Malaysia, and a variety of Philippines-based casinos. Las Vegas Sands Corporation (LVS) owns Marina Bay Sands.

A recent Bloomberg report by Stephanie Wong and Fox Hu noted that Macau’s gaming revenue outlook showed a 32% decrease this year to around $2.5 billion. The report also noted that Macau’s economy fell 17% in 4Q14, with a 2% decline in casino revenues. According to media reports, the Chinese government’s crackdown on corruption has impacted Macau’s gambling sector.

Melco Crown Entertainment (MPEL) and MGM Resorts (MGM) are the other players that compete with Wynn in Macau. The Consumer Discretionary Select Sector SPDR Fund (XLY) helps investors gain exposure to these casino companies. Wynn also has a 0.09% exposure in the iShares Russell 1000 Growth ETF (IWF).

The next article in this series will discuss Bridgewater’s position in CenterPoint Energy.

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