Mike asked in the comments about LVS and we’ve talked about it often enough that I thought I’d deal with it here.
The owners (90% Shelly) have announced they are going to sell 55M shares through GS. Although the company had a .04 earnings beat, so did all of Las Vegas so nobody here is doing any particular bang-up job. Granted the Macao revenues were through the roof, but they won’t go up 68% every quarter.
Also, much of the company’s value hinges on prospects of casino building, notably in Macao but, in the conference call, Bill Weidner said they “completed a strategic refinancing and entered the market to secure a $2.5 billion credit facility to support our development plans in Macao as we lead the historic effort to create Asia’s Las Vegas.” That sounds great until you found out that they lost their Singapore development partner and are one of 4 casino builders that are bidding on the project (and the only one without a building partner and one of 2 that haven’t got a Chinese partner).
This was obvious to after hour traders on Tuesday night who dropped the stock to $48 (5%) in after hours trading where it opened on Wednesday morning. Then, a miracle happened, the stock flew up to $52 yesterday on huge (for this stock) volume (5M shares).
Now I’m not saying this stock is being manipulated (’cause that would be wrong) but yesterday’s run netted the shareholder’s 220M in potential profits on the 55M shares that are going to be sold, that’s exactly the total value of all shares transacted yesterday! What a coincidence!!!
Why would anyone bother (theoretically because, of course, no one would do this) buying $220M worth of stock to make $220M? Well because the $220M in profit is based on a very tenuous value of 55M shares of paper that is only worth what it is printed on unless someone else wants to buy it.
Of course you don’t actually have to buy all $220M worth of stock to get the affect. Between 9:30 and 10am 2M shares were transacted for $100M, driving the stock from $48 to $50. The stock then trended down until 1pm when an amazing sudden interest developed and another 750,000 shares were purchased with abandon, driving the stock up another $2.
http://finance.yahoo.com/q/bc?s=LVS&t=1d
55M shares represents 45 days of average volume that these guys are trying to unload. The float (shares available to the public) is currently just 32M shares so we are talking about nearly tripling the available shares on the market.
So this is not the usual recipe for a stock to rampage to a new all-time high and a p/e of 207 is it? Stay away from this one until it stops going up – if I could manipulate a stock (which I wouldn’t, because it would be wrong) I had 300M shares of by taking control of the 30M share float I sure would jack the price all the way to $60 before I dumped my 55M shares on the public for a quick $3Bn!
Viva Las Vegas!
