October 24, 2016 concludes the 180-day IPO lockup period on Red Rock Resorts Incorporated. As described by the SEC, at this point, RRR's pre-IPO shareholders, directors and executives will have the chance to sell previously restricted shares. The event could put downward pressure on the stock and open a short opportunity for aggressive investors.
We suggest selling or shorting RRR prior to the event to take full advantage of an impending decline.
Business Overview: Operator of Casino and Entertainment Properties
Formerly known as Station Casinos Corporation, Red Rock Resorts owns, develops, operates and manages hotel, casino and gaming properties. These include Red Rock Casino, Green Valley Ranch, Sunset Station, Palace Station, Boulder Station, and others primarily in the Las Vegas, Nevada, area. The company also has gaming facilities in western Michigan and northern California.
Its portfolio includes 21 casino and entertainment properties, 19,300+ slot and video poker machines, 4,041 hotel rooms, 302 table games, 53 bars and lounges, 113 food and beverage venues, 96 movie screens, 26 live entertainment venues, and 282 bowling lanes.
During the second quarter of 2016, Red Rock Resorts announced that its subsidiary, Station Casinos LLC, entered into an agreement to acquire the Palms Casino Resort for a total of $312.5 million. The company announced the closing of the acquisition on October 3. In addition, RRR completed a $2.4 billion refinancing of the Station Casino credit line, which added a higher borrowing capacity, reduced borrowing costs and added additional financial flexibility.
Management Team Highlights
According to company filings, President Richard Haskins, Esq. has served as President of Red Rock Resorts and Station Holdco LLC since October 2015. He joined Station Casinos in 1995 and has held increasingly responsible positions during the last 18 years. Mr. Haskins is a member of the American Bar Association, the Missouri Bar Association, and the Nevada Bar Association.
CFO Marc Falcone has served in his position since November 2010. His previous experience comes from financial positions at Goldman Sachs, Magnetar Capital, Deutsche Bank Securities, and Bear Stearns & Co.
Insiders own a significant number of shares
When the lock-up expires, RRR's pre-IPO shareholders, directors and executives will have the chance to sell previously restricted shares, which number 88.6 million. This figure dwarfs the 27M offered to the public at the company's IPO.
We suggest that investors establish a short position in RRR shares today and hold their short positions through the end of the IPO lockup period.
I currently have a short position in RRR.
Disclosure: I am/we are short RRR.