Gambling

Wynn Macau (1128) is predicted to continue to rise in price given that the stock on loan is being returned with the short interest falling from 3% of the shares in issue to 1.5% since June. Concurrently, institutional investors continue to increase their holdings and now own 221m shares or 4.2% of the company.

SJM Holdings (0880) operates casinos in Macau and institutional investors have been extremely enthusiastic buyers of this $5bn market cap. Over the past year they have increased their holdings from 40m shares to 190m (3.8% of total shares) with the majority of this 450% increase taking place since March helping the price leap from under HKD 4 to over 7. Short selling is nonexistent.   Galaxy Entertainment (0027) is a slightly smaller player than SJM but it has seen a similar upward trajectory in its share price and this forced the short sellers to abandon ship. The quantity borrowed has halved to less that 0.5% of total shares. Funds who lend close to doubled their exposure to Galaxy in late 2009 to around 2% of the issues shares and have held this fairly steady since with some reduction.   Melco Crown Entertainment ADR (MPEL) is the main public listing for this company that owns several Macau casinos. It was quite heavily shorted relative to the small amount of supply to borrow due to low institutional ownership but stock on loan has halved since June to a low level.  The Las Vegas brigade are trying to bridge the spending gap between east and west by increasing their Macau presence. One of these is Las Vegas Sands (LVS) who own the popular Venetian hotel (at least with this office!) in Macau. Short selling has recently picked up a little in LVS and is now 8.5% of the shares in issue. Prior to mid August the increasing share price was encouraging investors to close their short positions which had been as high as 9.5%. Asset managers have bought an additional 10m shares over the last 6 months and now own just under 10% of the company.   It is a different story for the more Las Vegas reliant MGM Resorts International (MGM). The quantity on loan has been increasing all year and is now a very high 14% of total shares. So far this has been profitable for the short sellers since the price has almost halved. Funds who lend have recently started to reduce their holdings thereby joining the short sellers in being nervous about the future.   Wynn Restors (WYNN) shows short covering over the past 12 months to a low of 2% at the end of July and is now at just under 4% of total shares.   Unless investors are very wrong, Macau is booming and even though Asians are known to like a flutter, this bodes well for those companies jumping on the eastern bandwagon.