On Wynn Resorts’ (WYNN) first quarter conference call, Chairman and CEO Steve Wynn was asked about the company’s recent announcement to increase its share repurchase to $1 billion. Wynn responded back with a full-on critique of the stock market, which he says resembles casino activity.
"We never know what the Street is going to do with the funky trading. And we all feel that, both as individuals and as a company, that we should be prepared to take advantage of real opportunity when it occurs,” he said. “So we just wanted to make sure that we are properly armed in case there was something strange that happened on Wall Street and the stock market dropped or our stock went to a level that we thought was grossly oversold, we would jump on it."
Wynn dug into activity by those shorting his stock.
"As long as the short players fool around for $1 or $2, that's fine. But ...the exchanges don't enforce the rules of naked shorts. So, I mean, it's unconscionable manipulation of the stock that occurs. They open up every morning, and the high-frequency traders in the shorts have a ball selling shares, and then value buyers step in the afternoon and they cover the shorts. I mean, it's regular casino activity." The company currently has about 14 million shares short, or almost one-quarter of total float.
“We see a lot of shorts because of China, because we're such a clear China play," he said. 60% of Wynn’s profit comes from Macau, and the stock bounced back heavily after mid-February when worries on China slowdown lessened.
Wynn himself has bought shares in mid-February and mid-April. "Although I can't do anything about it myself, I take advantage of it when it gets online and buy shares,” he said. “I mean it's fine when they drive the stock down for reasons that are irrelevant and completely disconnected from anything to do with our business operations. So the stock markets got more volatile, more stupid as a gambling game than ever before,” he said.
He lamented that the SEC hasn’t done anything about high frequency traders.
“I have very little respect for the integrity of the trading on the exchange in most stocks. And I have particular disdain for the fact that the SEC has failed to deal with high-frequency traders who are doing nothing more than taking advantage of inside information, a buy or a sell order, because of technology advantages,” he said. "If you read Flash Boys, it's all spelled out for you. And if I execute an order, I'll use the IEX. I'll use Brad Katsuyama if I was buying something, so that I couldn't be fronted by the high-frequency traders. But there's an awful lot of that going on."
Wynn said he sees the impact of high-frequency traders frequently.
"The other day I was watching the stock open up, and it went up on share volumes of a few thousand shares. I mean, every trade was a tick up. That's not the way it should operate in an honestly or intelligently run exchange. But that's the thing, all those guys sold their dark pools and their order flow and the positioning on the floors of the servers to the high frequency traders. And it's made a couple of guys that I'm friendly with very rich because they are high-frequency traders. But don't respect the activity, and I'm severely critical of it. And I don't mind saying so, either."