Keshav Agrawal is a CPA with a background in accounting and finance. He has more than a decade of experience in trading stocks and derivatives for his personal account. Keshav believes that “the market always offers opportunities,” and in search of this he follows various industries and companies depending on current domestic and international market conditions. He often uses suitable ETFs and ETNs in an effort to capture the current market situation and fluctuation in commodity prices.
Keshav manages Covestor’s Retail Tech and Financials model, which invests solely in the retail, technology and financial sectors. Current top positions include Fluor Corp (NYSE: FLR), Baidu Inc (NASDAQ: BIDU) and the Powershares DB Gold Double Short ETN (NYSE: DZZ).
On April 29th, Keshav bought Las Vegas Sands Corp (NYSE: LVS) which owns and operates the Venetian, Palazzo and Sands in Las Vegas, as well as the Sands, Venetian, and Four Seasons in Macau.
optionMonster recently noted that options trades indicate a growing bet that LVS will experience high volatility:
optionMONSTER systems today show 8,000 June 49 calls trading for $1.80 against previous open interest of 2,244, making this a new position. Just 20 seconds before the options traded, a single block of 304,000 shares were sold for $46.26. This was 10 times the size of the next-largest block of stock and sold for $0.08 less than the prints immediately before and after this trade.
Given that the stocks would balance the delta of the options exactly, it appears that these were traded together. That would indicate that the trader was selling the stock and buying the calls to profit from a rise in volatility.
This trade can potentially profit if shares move sharply higher or lower, or if the realized volatility is greater than that implied by the options.
Glenn Rogers on Seeking Alpha also noted the strengths of LVS:
Las Vegas Sands has four properties in Macao, including a Four Seasons hotel and casino, with operating margins of over 31%. The company plans to add more than 13.3 million square feet on two additional parcels they own in Macao, which will translate into another 6,400 hotel rooms. This is phenomenal growth by any measure.
There’s more. Las Vegas Sands is enjoying phenomenal growth in Singapore as well. The Marina Bay Sands property has been open only a year and produced EBITDA of over U.S. $300 million during the most recent quarter with an operating margin of 54.6%. In the fourth quarter of last year, EBITDA increased by 141% to U.S. $738.9 million on net revenues of U.S. $2.02 billion.
Of course, we shouldn’t ignore the Las Vegas properties, which generated EBITDA of U.S. $80.6 million in the fourth quarter of 2010, up more than 40% from the same period in 2009. Even though the operating margins on the U.S. properties are only 25.9 %, they are still throwing off cash flow. As the economy improves, the company will benefit from increased convention business and tourist traffic.
But wait, there’s still more. There is a chance that Congress may finally say yes to Internet gambling. If that happens, it will provide a large additional revenue stream for all the major casinos, and Las Vegas Sands will certainly benefit as much or more as any of them. This is controversial, but influential Sen. Harry Reid of Nevada has been floating this idea so it is certainly more than a pipe dream. That said, it’s certainly not a primary reason to buy the stock, but it may well provide additional momentum to the upside if and when online gambling in the U.S. is approved.
Sources:
“Sharp Move Seen for Las Vegas Sands” Chris McKhann. Option Monster, 4/29. https://finance.yahoo.com/news/Sharp-move-seen-Las-Vegas-optmonster-2248965079.html?x=0&.v=1
“Time to Visit the Casinos: A Look at Las Vegas Sands, Wynn Resorts” Glenn Rogers. Seeking Alpha, 4/29. https://seekingalpha.com/article/266626-time-to-visit-the-casinos-a-look-at-las-vegas-sands-wynn-resorts?source=yahoo
