At the moment, the Wynn is the only thing attracting people to that end of the strip. It's not like there's a huge mass of people being mined who will go elsewhere; they already are if they don't want to be in WYNN's property, specifically.
Adding more neon within stumbling distance will improve traffic, not reduce it.
This is no payback. It's a windfall.
The only possible drawback I can see is that filling all the dirt lots there will raise the value of the (under)developed corner just north of DI from Encore. If that hilarious little strip-mall gets sold it means Tacos El Gordo will have to move out. And that's a shame.
Because, as I pointed out, this has become a piggybank, not an investment itself. It's got a negative beta. The divs can't help that much.
Not surprising, given its proximity to his old job. Like the old Stardust/Echelon property just northward its potential for easy access to Wynn/Encore customers and facilities makes it the best un-built lot in town that isn't under a golf course.
Trivia: If you look down into the Frontier lot from the Wynn properties, or if you zoom in on Google maps, it's pretty clean except for a couple of large (10-feet or so) flat objects with a petal pattern on them. Double bonus points if you can look around and see what those were used for. It's a reminder of how long that land has been fallow.
What tangible assets?
AMD will eventually have to write that $550 million off. That's a fat, red quarter waiting to happen.
I expect you to disappear long before that even comes close to occurring.
i think people forget that the market was crashing hard just before 9/11, undergoing the third dip of the dotcom bust, and capitulation was an industry right before the attack. Then they were closed for a week in mourning. When they reopened they rallied ("patriot rally") for six months, and then desensitization nullified gritty jingoism and they tanked again and stayed down for a year. W was not an economic motivator until he started the Iraq war and shovelled money into arms and physical security. But we all know that martial activity is a false economic boom, and its output does not feed back into new production capacity but is sunk investment. That was coupled with profits increased by fiat as production was offshored, reducing costs without increasing value and increasing base unemployment. So when the shysters cooked up the real-estate derivatives scam a couple of years later, there was nothing to backstop it when it inevitably collapsed.
But that's history and lessons learned. What happened today was simple panic. People are skittish because we haven't had any market-killing news in a while, and Argentina is just big enough a mid-tier economy to make people wonder about propagation. But it's in on its fourth mortgage, so there really isn't much more that it could propagate to the rest of the world that isn't already considered junk debt, written off almost the moment it was signed. China and Europe are stable (vice Portugal, maybe, but it got upgraded recently). The US just found 4% GDP in an old coat pocket. We'll all try not to look Argentina in the eye as we walk past it into the Whole Foods, is about all that will happen there.
Not with the the conflicts being minor. There are bigger economic fish to fry. Argentina is making itself known, and the chickens are running for the hills, but it's not that big a deal.
You asked how you could lose, and I told you. If you don't understand the true meaning of the risk you're taking, that's good, because it leaves more of your money on the table for me to take in the long run.
"You have no money in the trade."
That's lovely for your IRR. But what counts is return against risk.
You have risk in the trade, and you've enhanced that by opening both legs in the riskier direction.
In return, you're getting a good but not unit-probability chance at a dollar in margin on it, but you're giving up a unit-probability chance at a dollar in dividends to get there. To get those dividends by playing just the QRE side long you actually take lesk risk and tie up less margin.
But, as you say, you tie up less cash this way. But at some point, if you do enough of these zero-cost trades (btw I've been doing synthetic longs for years), you realize that your returns aren't free, and eventually you come to understand that ROI is an illusion that's only useful for comparison of ceteris paribus alternatives, so return-on-cash-in isn't always the right metric.
If you really want to be no-cash-in, and minimize margin, do the same trade, but using options. Or use the same margin and leverage the hell out of the position. Make $10 where you thought you were making $1. Options don't care about divs, either.
Wow. Went right over your head, but you grabbed it and slammed it into your head to make sure it hurt. Thanks, Obama.
"Losing on "divs", being short BBEP and long QRE. You want to explain . . . no, wait, please don't try!"
You said it yourself. You have to pay the div from the one to the other. All you're doing trying to capture the dollar in missing equity by playing them against each other is giving up the dollar in divs you'd get just by holding one of them. Try to keep up.
"Do you know what "basis" means?"
You should look it up before asking. And figure out how much you're losing on divs with the neutral position. It's basically giving up the dollar profit you think you're making.
"a plausible scenario where you get hosed."
If you're long QRE and short BBEP and the merger unwinds, both will retrace what the announcement did to them. BBEP dropped and QRE popped, so in a retracement the opposite will occur. Your short BBEP will move against you and your long QRE will get clobbered. You've enhanced that risk, not hedged it.
This deal is a long-term win for both but a short-term expense to BBEP shareholders. BBEP won't drop if the deal fails, it will pop. And QRE will lose big. I'm much more comfortable knowing I'm missing out on a few percent gain over six months than watching all that legal activity loom into the closing date; the chances of this one getting split before it's hitched are not quite 50-50, but they're bigger than low double digits.
People underestimate Steve Wynn, and that has never been a savvy move. Even when Kerkorian kicked him out of Mirage, he left with a giant bankroll and the vision to recreate Vegas again.
Still in for 250 by opening of Cotai. Consider that the low limit of ROI until then.
cooch is correct. the stock should be pinned to that much BBEP, regardless of divs.
and the gap yesterday is closed today. the arbs are keeping the vig alive, and the only reason i can see for that is fear QRE will be forced to back out.
"doing"? selling, right? because buying puts on BBEP is wrong for all reasons. it's likely not to gain as much as QRE does, not to lose as QRE gains. and if the deal bombs, BBEP pops, to reverse the drop it took when the deal was announced. BBEP has no downside in terms of the status of completion or noncompletion of the deal.
QRE can go either way. up a dollar as the deal approaches finalization and it becomes more certain holders will be getting the BBEP shares, or down several dollars if the deal falls apart.
google "bbep dividend history" and select the first link (it's usually the nasdaq list).
then look at the various columns and do the extrapolation. BBEP's timing is all over the map, though they're most consistent on the pay date.