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April 29, 2015

April 29, 2015 - Slide1

 

BULLISH TRENDS

April 29, 2015 - Slide2

April 29, 2015 - Slide3

April 29, 2015 - Slide4

April 29, 2015 - Slide5

April 29, 2015 - Slide6 

BEARISH TRENDS

 

April 29, 2015 - Slide7

April 29, 2015 - Slide8

April 29, 2015 - Slide9

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April 29, 2015 - Slide11


WYNN Q1 2015 CONFERENCE CALL NOTES

Takeaway: WYNN missed lowered estimates badly and cut the dividend. Negative implications for LVS and MGM.

WYNN Q1 2015 CONFERENCE CALL NOTES - WYNN

 

CONF CALL

  • Hope for improvement from CNY turned out to be incorrect 
  • Degradation in VIP volumes have continued even into April
  • Q1 trends have continued into April
  • Las Vegas softness: Asian impact on baccarat
  • Dividend lowered based on soft results.  Board of Directors would not hesitate to change dividend policy again going forward.
  • Wynn Palace on track to open on March 2016
  • Allocation of new tables depend on non-casino/casino % (Wynn Palace has most attractive non-gaming option).
  • Wynn Everett:  Start construction in the fall; almost completely financed with non-recourse debt 
  • "Don't want to div out borrowed money"
  • New junket rooms did well.  Other junket operators 'weren't as powerful'.
  • LV Occupancy/room night fell YoY: because of ConAgg comps in March.  Lot of convention business but not much room inventory in January.  
  • LV:  May convention strong mix; 
  • LV: Summer trends in 2015 not pick up as in previous years due to stronger $ and weak Chinese play
  • LV: EBITDA decline continued in April
  • LV: Non-casino rev was flat in 1Q and will be flat in 2Q
  • Macau Labor allocation: got less than what they wanted and appealed the process
  • Macau:  smaller inventory of rooms than their competitors so less of an occupancy drop
  • Grew mid-segment of their mass segment quite nicely
  • 2014 employee turnover was 11% (less than market average of 20-25%) but will not protect them in the new changes in the marketplace
  • Uncertainty is the word of the day in Macau
  • Social harmony affected by Cotai expansions
  • Beijing policies have been unpredictable
  • Dividend policy:  quarterly reviewed. Want to avoid another deduction. 
  • Reallocated rooms from VIP to mid-tier mass.  Over half of rooms are now allocated to mass.
  • Slow down project in Cotai and/or Boston?  Can't slow it down. 
  • Chinese President Xi Jinping unequivocally supports Macau
  • Japan Diet: study bill appeared today. Good news.
  • Macau:  decline in VIP has opened a window to attract more premium mass customers. 
  • Wynn Palace: primarily a non-casino attraction
  • Wynn has smoking lounges in the terraces, some competitors don't have some advantage
  • Macau LRT bridge:  should be done in 2017 or as late as 2020.  Need to take care of reclaimed land issue from HK.
  • Boston: making forward with permit progress. Have performed drilling on site.  Hopefully get it open at end of 2017. Have spent $200m to date. Still need to spend $100m more on remediation and other fees before groundbreaking this year.

REPLAY: The Macro Show with Keith McCullough

In case you missed it. Here's the replay from today's edition of The Macro Show.

 

 

The Macro Show is Hedgeye's dynamic pre-market rundown highlighting the most important global macro developments where CEO Keith McCullough shares 15 minutes or less of prepared market analysis and commentary and then answers your questions in a live Q&A session.


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This indispensable trading tool is based on a risk management signaling process Hedgeye CEO Keith McCullough developed during his years as a hedge fund manager and continues to refine. Nearly every trading day, you’ll receive Keith’s latest signals - buy, sell, short or cover.

Cartoon of the Day: Just Imagine...

Cartoon of the Day: Just Imagine... - Japan QE cartoon 04.28.2015

"Last night Japan reported a bomb of a Retail Sales report at -9.7% year-over-year for the month of March," Hedgeye CEO Keith McCullough wrote in today's Morning Newsletter. "That compared to a paltry -1.7% in the month prior. And the Japanese stock market went up on that…"

 


#Confidence?

Being long stocks/commodities ahead of an easier Fed and bombed out Q1 earnings expectations is one thing – holding all long positions related to the consumer as gas prices rise and consumer confidence makes lower-highs is entirely another.

 

As you can see in the data/chart below, “confidence” is both pro-cyclical (Late-Cycle) and mean reverting. If March was the high for this cycle, that’s is going to be a new problem. In rate of change terms, confidence has been bullish for 6 years.

Click image to enlarge.

#Confidence? - z 1

 

#Confidence? - z 2


KORS - Vetting Book. New HedgeyeRetail Product

Takeaway: We're launching our first 'Idea Vetting Book' next week, which will thoroughly vet the bull/bear case (and ultimate EPS power) for KORS.

NEW HEDGEYERETAIL PRODUCT

On Thursday, May 7th at 1:00pm ET we will be releasing a new product for HedgeyeRetail subscribers aimed at Idea generation around battleground stocks in Retail, or those that simply pass through our initial Idea screening process and make it to our Idea Bench. These “Idea Vetting Books” are distinctly different from the Black Books you’ve come to expect from us (and should still expect from us in the same quantity). 

 

While Black Books are focused around our top ideas, the Vetting Books will go through all financial and operational puts and takes across TRADE, TREND, and TAIL durations sourced from a group of roughly 125 stocks. We don’t know where we’ll come out on a given name until the very end of our process – and in some cases, the answer might be that ‘the call’ is to do nothing with the stock. But we’ll explain in detail precisely why that is the case. This is and has been a core part of our internal investment process in sourcing what we consider to be Big Ideas, and with this product, we’re opening it up to our customers.

 

VETTING BOOK #1: MICHAEL KORS (KORS)

Next Thursday’s Vetting Book will be focused around Michael Kors (KORS). The name recently found its way onto our Long bench, after losing $8bn, or 40% of its market value over the past 12-months. How we see it, this name is likely a binary outcome. At $63 it appears to be trading at 14x earnings, but it’s probably not. The ‘e’ part of the equation is wrong. Either the company hits/beats earnings and the stock goes up meaningfully, or numbers come down materially, and the stock looks expensive at a much lower stock price. We’ll focus on vetting the near-term earnings drivers, long-term opportunity for growth as well as the cost of that growth, and ultimately, what the right size and margin structure is for KORS.

 

We’ll be hosting a conference call at 1:00 pm ET on Thursday, May 7th.

 

CALL INFO WILL BE DISTRIBUTED THE WEEK OF MAY 4th.


Daily Trading Ranges

20 Proprietary Risk Ranges

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