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In our morning research meeting yesterday, Todd Jordan, our Sector Head for Gaming and Lodging, highlighted comments from Steve Wynn, the CEO of WYNN Casinos, during his company’s conference call the other night. I thought his comments were worth noting from a broader perspective as it relates to how good managers should manage in a downturn and also an emerging TREND in defiant capitalists.

As it relates to his company’s hiring plans in the current environment versus the government’s plans, Wynn stated:

“I mean, everybody is letting everybody go. I created 4,000 or 5,000 new jobs here, does that make us a bad guy? How many new jobs did Uncle Sam create? Zero.”

This point is important because it is indicative of business leadership on the part of Wynn. Good companies will take share at the bottom and often this requires maintaining staff levels and capacity, or in the case of WYNN actually adding employees during the downturn. If a company is furiously reducing headcount, cutting costs, and selling assets at the bottom, they probably were not proactively prepared for the cycle. Nor will they be taking share in the downturn. I’m not expressing an opinion on Wynn’s stock (you can email Todd for that at ), but rather the strategy.

The other point I wanted to highlight from Wynn’s call, which we believe is an emerging TREND to watch, is the battle between capitalists and the government. As an aside, the point of this note is to not make a political statement against President Obama or President Bush, but rather to emphasize that successful capitalists like Steve Wynn are not going to stand on the sidelines, while the government makes repeated and costly mistakes. Specifically, his quote about the first TARP was:

“I don’t mean to go on, I will address your question technically but the political leadership from Washington was completely lacking in the first $350 or $400 billion they spent last year. So, that money went down the drain and didn’t produce the kind of result it was suppose to. Theoretically there was supposed to be some smart people on the job paying attention to this like the Secretary of Treasury and people like that, the former chairman of Goldman Sachs.”

This is a question all of America should be asking about this $350+ billion and hopefully will be asking with the stimulus and spending plans of the new administration. This isn’t a Republican or Democrat thing – this is an American Free Market Capitalist thing.

To the extent that the US government thinks capitalists will stand idly by while their hard earned money is misallocated, they are likely sadly mistaken. We see evidence in this anecdotally from Steve Wynn’s diatribe below, but also in the numbers of opinion polls, like the recent Rasmussen poll that showed only 34% of those polled believed the stimulus plan would help the economy.

Daryl G. Jones
Managing Director

Excerpted Comments from Steve Wynn on the WYNN Q4 2008 Conference Call:

“When I told you about the business we lost, it was a company that was one of the healthiest companies in the United States of America, much more healthy than the government of the United States of America. That is disturbing to me when a chairman of such a company feels intimidated. If that’s that class warfare or as I mentioned earlier that capitalism needs to be punished, if that is part of the mentality of this administration we’re in for a worse time than we expected.

President Obama got swept in to office on a wave of optimism about a better future. If we’re going to have increased welfare government we’re not going to create jobs and we’re not going to get out of this recession quickly. If we really have an intelligent, brilliant, sensitive government that understands how the country works and job creation is at the smaller business level. I mean, everybody is letting everybody go. I created 4,000 or 5,000 new jobs here, does that make us a bad guy? How many new jobs did Uncle Sam create? Zero.

So, I’m saying to myself, look there are certain times when the rhetoric from Washington is appropriate and if Northern Trust is taking money then they don’t need to go to a golf tournament, not at this point in their career. I would have to agree with those Congressmen. On the other hand, if this kind of rhetoric is not very enlightened and very sophisticated it can lead to an unintended consequence like the cancellation of a wonderful company’s educational forum where they teach salesmen the new programs. They need to go somewhere to do that. Las Vegas was the cheapest place for them to go. It’s the greatest value for conventions and meetings in the United States of America.

We consistently are the best value because we’ve got slot machines and crap tables we can afford to sell finer rooms for less money. We give better meeting facilities in terms of technology and in terms of the services available to the delegates. We serve the convention and meeting public the best of anyone in the United States of America. We’re more accessible in terms of our airport and for that to get torque or perverted because of political flap jaw or political speech would be unfortunate. So, let’s hope that the government grows up and does a good job and gets us out of trouble instead of putting us in a deeper hole than we’re in already.

On political leadership in Washington

I don’t mean to go on, I will address your question technically but the political leadership from Washington was completely lacking in the first $350 or $400 billion they spent last year. So, that money went down the drain and didn’t produce the kind of result it was suppose to. Theoretically there was suppose to be some smart people on the job paying attention to this like the Secretary of Treasury and people like that, the former chairman of Goldman Sachs.

You think well, they ought to know what to do. It got away from them a little bit and this last stimulus program that has come out of Washington is more of a welfare program than a real jobs creation program in spite of what the President says. Fixing bridges and roads are technically demanding jobs that require technical help, good drawings and substantial lead time. That may be a proper thing for us to do as Americans to fix the infrastructure but to think it’s a quick fix jobs program is a naïve and insincere and incorrect statement.”

Daryl G. Jones
Managing Director