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Clark McIntyre

Clark McIntyre
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  • Why New Jersey Is Essential To MGM's Future [View article]
    Redskins, can you explain to me what lies I posted? Maybe you need to understand how the legal system works. The company didn't go to trial, fool. No trial = no "not guilty" verdict. They settled out of court for $731 million. Forfeiting $547 mil to the US government doesn't happen when you're found "not guilty." And they were forced to pay the remaining $184 mil to customers whose accounts were frozen. Being found "not guilty" means you don't have to pay restitution. Hardly the case with PokerStars.

    And as a follow up to my original point, the American Gaming Association just filed a complaint against PokerStars' attempt to gain a license in NJ. When the biggest casino lobby in the US has a problem with you, you should be worried. Maybe you should get a clue next time.
    Mar 5, 2013. 07:59 AM | Likes Like |Link to Comment
  • Why New Jersey Is Essential To MGM's Future [View article]
    Poker Stars will be lucky to be awarded a gaming license after they conscientiously violated federal law for operating an illegal online poker site for years until the Feds shut them down on Black Friday in 2011. It would be surprising if NJ licensed them after the DOJ cracked down on them very publicly.
    Feb 20, 2013. 10:04 AM | 1 Like Like |Link to Comment
  • Why New Jersey Is Essential To MGM's Future [View article]
    MGM's potential to succeed in the future is primarily tied to the Las Vegas Strip recovery. NJ is an afterthought for them. The reason they're trying to get their license reinstated is because competitors in markets they're trying to penetrate (like PENN in Massachusetts and Maryland) keep pointing out to lawmakers that MGM has shady ties (i.e. Pansy Ho), even though it is a completely baseless allegation. Nevertheless, it's a black cloud that hovers over them and hinders their ability to pursue new development opportunities.
    Feb 20, 2013. 09:59 AM | 1 Like Like |Link to Comment
  • Casino stocks trade higher after Zynga files initial paperwork to enter the real money gambling game. Traders may be betting that the entry of a well-known tech company into the mix could increase the chances politicians in DC may have to take up the issue of regulating the industry. Advancers: LVS +1.1%, MGM +4.1%, WYNN +1.4%[View news story]
    MGM is trading higher because they just announced a massive refi. The US online poker market is not that material for these names
    Dec 6, 2012. 11:01 AM | Likes Like |Link to Comment
  • Special Dividend At Las Vegas Sands And Its Implication [View article]
    LVS issued a dividend because of the pending fiscal cliff issue that's going to raise the dividend tax rate to 43% from 15%. Sheldon has a big target on his back now after single-handedly funding the Romney campaign. Don't be surprised if the DOJ ramps up its investigations of LVS' alleged violations of the FCPA
    Nov 27, 2012. 11:39 AM | 1 Like Like |Link to Comment
  • Las Vegas Sands: Compelling Valuation, Capital Return Prospect Suggest A Buy [View article]
    Good article but for reference, investors in gaming operators like LVS, WYNN, and MGM don't care about the P/E multiple. These companies have depreciating assets (i.e. casino resorts), so their valuations are better characterized using the EV/EBITDA multiple. Just an FYI
    Nov 20, 2012. 08:04 AM | 2 Likes Like |Link to Comment
  • Sheldon Adelson's Online Crusade Makes Las Vegas Sands A Sell [View article]
    Understood. As a reference, operators with exposure to the Vegas Strip tend to trade at EBITDA multiples in the 8-10x range. Macau operators deservedly trade at a larger multiple (14-16x). This explains why WYNN and LVS are trading at a premium to MGM. MGM's property in Macau is a JV that they own 51% of. Sands' and Wynn's properties are wholly-owned assets
    Oct 31, 2012. 02:46 PM | Likes Like |Link to Comment
  • Sheldon Adelson's Online Crusade Makes Las Vegas Sands A Sell [View article]
    This article is wildly misguided. I don't even know where to begin.

    1) There is absolutely NO chance the US online gambling market will be $35bn in 5 years. Most gaming analysts estimate it will be $5bn in the US max. Any online gaming will be poker only, meaning since players are betting against each other rather than the house, the upside for earnings is limited. If online bacc or blackjack were legalized, different story, but the online gaming bill Harry Reid is trying to push through is poker only.

    2) The forward P/E multiple is a negligible metric for gaming operators like LVS, WYNN, and MGM. Investors trade these companies based on their EV/EBITDA multiples. These companies have depreciating assets to account for (i.e. casino resorts), so EBITDA is the widely accepted metric in the space to gauge how a casino operator is performing, not EPS.

    3) "Forget about Macau. LVS buyers are primarily buying cash flow in the U.S..." This couldn't be farther from the truth. What the Palazzo/Venetian spit off in cash flow generation is negligible. Macau and Singapore are the cash cows of the company. Combined, they account for just under 90% of corporate EBITDA, while Vegas and Bethlehem account for ~10%. So no, if you're investing in LVS, do NOT forget about Macau (or Singapore) because these are the markets that will get you paid.

    4) You grossly underestimate Sheldon's political influence. He and Eric Cantor are boys and there is zero chance an online gaming bill will get through the House on Cantor's watch unless Sheldon gives him the green light. If Romney wins the election next week, you might as well push federal online gaming passage back another 4-5 years, because he's already announced in his GOP platform that online gaming will not happen on his watch. That's what $46.5mm in political contributions from Sheldon will get you.

    Not trying to rain on your parade at all. I agree that online poker needs to be legalized at the federal level eventually to prevent dollars from floating out of our borders to foreign websites.

    Bottom line is that it's passage is going to require a series of things to happen: 1) Harry Reid needs the Democrats to retain a majority in the Senate; 2) Obama needs to be re-elected; and 3) Dean Heller (R-NV) needs to win the other Senate seat to help garner Republican approval for the bill. None of which is a guarantee by any means.
    Oct 31, 2012. 02:28 PM | 3 Likes Like |Link to Comment
  • Though unconfirmed rumors are out that tip off Las Vegas Sands (LVS) has lined up banks to help it finance the dreamy resort in plans for Spain with costs estimated to be in the tens of billions, Nomura's Harry Curtis still sees roadblocks ahead for the project. The analyst says another $5B in financing still needs to be dug out as he reiterates his belief the Vegas-in-Spain vision isn't the best path for the company. [View news story]
    Vegas has reinvented itself as an entertainment destination; hence, why visitation has been steadily increasing in the last 3 years. The town has become less dependent on gaming spend and diversified itself through non-gaming amenities like premier nightclubs and restaurants. Places that haven't reinvented themselves (see: Atlantic City) have suffered.

    Secondly, internet gambling is a non-issue. Legislation isn't going to pass this session and Romney has made it clear that if he's elected, online gaming will not happen. That's what happens when Sheldon Adelson (Sands CEO) funds your campaign to the tune of $36 million.

    And don't be so naive. More people than you realize go to Vegas to partake in the taboo lifestyle that most places don't offer.
    Oct 17, 2012. 10:23 AM | 2 Likes Like |Link to Comment
  • Las Vegas Sands (LVS +1%) CEO Sheldon Adelson's "moral opposition" to online poker has kept the company stuck in neutral while rivals such as MGM Resorts and Wynn Resorts make strategic plays to prepare for the potential of legalized online play. Though Adelson appears likely to take his fight to Congress to attempt to stop the online poker movement, gambling execs on the other side of the fight see him facing an uphill (and unprofitable?) climb. [View news story]
    Absolutely zero chance online poker is legalized at the federal level in the next 4 years. Sheldon is too close with Eric Cantor, and he won't sign off on any online gaming legislation without Sheldon's approval.
    Sep 27, 2012. 09:36 AM | 1 Like Like |Link to Comment
  • Earnings Preview: Wynn Resorts [View article]
    Yes, Elaine also gets paid a hefty sum when dividends are issued. I don't think Okada will get his shares reinstated, but I do think Steve will settle and have to pay him his money before 2022 (which is how it stands now).

    Okada can't go after Steve because he is no longer on the Board and is completely ex-communicated from the company. In the off-chance they were reinstated, I suppose this would be possible, but I don't see it happening. Elaine's shares have no voting rights, and I have a hard time seeing her team up with anyone and ousting Steve. Steve lost his company (Mirage Resorts) to MGM 10 years ago. He's not going to let himself fall into a position where that could happen again.

    As for LVS, there is no payment cycle concern because the mass market players bring their own money with them to Macau. In VIP play, players are issued credit by the junkets, so these VIP players don't bring any physical cash with them. It's an IOU business model, similar to the one you might see in Vegas when casino hosts offer the high rollers credit.

    I think LVS has gained steam in the VIP segment in Macau, but Steve is still king in this department. We'll know next week when LVS reports how much VIP share Sheldon has managed to squeeze out of Steve.

    Slots are pretty much irrelevant over there, as are all games besides baccarat, which accounts for 90% of all gaming revenues. Asians love bacc and hate blackjack/slots. Blackjack and slots are a last resort when there aren't any seats available at the bacc tables.
    Jul 17, 2012. 07:42 PM | Likes Like |Link to Comment
  • Earnings Preview: Wynn Resorts [View article]
    I think we will see a special dividend. Tough to say how big it will be. Historically, special dividends are something he typically announces after Q3. Don't forget that Steve loves to pay himself (he owns roughly 10mm shares), so I do think we will see something. If I had to guess, I think it would be in the $3-4/share range, but that's pure speculation.

    The company has a great balance sheet, but typically for projects as big as Cotai, companies tend to keep more cash on hand in case things run over budget. That extra cash will probably come out of the special dividend pool, if one is issued.

    I think it is too hopeful to think the stock will run all the way up to 135 by Friday. Macau is still the undisputed premier gaming market in the world but the market growth rate is slowing. Wynn's bread and butter is VIP and, as he stated on the call, the junket cycles for players repaying their debt is getting dragged out longer (70 day repayment cycle vs. 30-45 previously).

    Part of the reason I like LVS is because their bread and butter is the mass market. Right now, only 1% of mainland Chinese citizens make it to Macau annually. In a country of 1.3 billion, if they can increase that penetration rate to 3-5% annually, the additional revenue they can generate is very material. The Macanese government knows this and is working furiously to improve their infrastructure to make it easier for mainlanders to get there. A high-speed rail from the Guangdong province is almost finished and will be ready by early next year. Once that's complete, visitation to the city should increase meaningfully. They are also seeking to loosen visa restrictions on the mainlanders, which could also provide a boon to visitation.
    Jul 17, 2012. 06:50 PM | Likes Like |Link to Comment
  • Earnings Preview: Wynn Resorts [View article]
    Kind of a ho-hum quarter. They under-held in baccarat in Las Vegas, and adjusting for normalized hold, that would have contributed to an additional $30mm in EBITDA. Normal hold for baccarat is 21-24%. They held at 15%, so the players beat them up pretty good this quarter. Last year, if I recall correctly, they significantly over-held at around 37%, which contributed to their record quarter. Baccarat has some major volatility, but it is the favorite game of the Asian high rollers, so you can't do much else except brace yourself for the swings.

    Macau was slightly above consensus at $302mm; however, they did used some colorful accounting to make that number look better than it really is. Previously, that bad debt reversal of $17mm mentioned in the press release would have been considered an expense, but now they include it as part of EBITDA. If you strip that out, EBITDA in Macau would have been $285mm, which was inline with expectations.

    I personally don't see much of a growth catalyst for why you'd want to own WYNN at the present moment. Even Wynn admitted on the call that competition among operators is spicing up, so that signals to me to have reason for caution. Their Cotai project financing is almost complete, but that is still 3-4 years down the pipeline.
    Jul 17, 2012. 05:46 PM | Likes Like |Link to Comment
  • Earnings Preview: Wynn Resorts [View article]
    cp,

    You do not understand. Wynn Macau (1128 HK) is a majority-owned subsidiary of Wynn Resorts, Ltd. Wynn Macau is the "owner" of Steve's casinos in Macau. When WYNN reports its quarterly results, it reports for both Wynn Resorts (Las Vegas only) and Wynn Macau, Ltd. (Macau only) . Its Las Vegas operations are under the parent, which is WYNN. You're looking at the financials for WYNN's Vegas operations only.

    Las Vegas Sands also has a subsidiary, Sands China Limited (1928 HK). SCL is the "owner" of Sheldon's casinos in Macau. In Singapore, Marina Bay Sands is operated under the parent, which is LVS. When LVS reports, they report for both LVS (Las Vegas and Singapore) and Sands China (Macau only). You're looking at the financials for LVS's Vegas and Singapore operations only, which is why your projected Adj. EBITDA number is over $1bn

    Not trying to show you up. Just want to clarify. I'm a junior sell-side gaming analyst, so this is literally all I do for a living. I like to come on here and bounce gaming ideas off guys. Good dialogue
    Jul 17, 2012. 01:11 PM | 1 Like Like |Link to Comment
  • Earnings Preview: Wynn Resorts [View article]
    There is absolutely zero chance the company doesn't do at least $1bn in EBITDA. They've already done $390mm after one quarter alone ($290 in Macau and $100 in Vegas). They're projected to do another $375mm today (and that's the low end of the range. Could be as high as $400). That would be $765-$790mm in EBITDA for the first half of the year alone. If you don't think they can do an additional $235mm in EBITDA over a 6-month period, you don't know what you're saying. They'll do that in Macau alone.

    They're going to do at least $1.1bn in Macau alone for the year and probably another $350-400mm in Vegas. If the company doesn't do at least $1.5bn in aggregate EBITDA for the year, the Chinese slowdown will be a very serious concern and the stock will get crushed even more than it has in the last 3 months.
    Jul 17, 2012. 10:52 AM | Likes Like |Link to Comment
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