Despite a less-than-successful second quarter report, The majority shareholders in Red Rock Resorts have increased their investment in the company.
According to CDC Gaming Reports, Frank Fertitta III and his brother Lorenzo increased their stake in the Las Vegas company, purchasing an additional $51 million of stock. second quarter results, the Las Vegas company’s largest shareholders spent more than $51 million to show their confidence in the business.
According to filings with the Securities and the Exchange Commission, from Aug. 8-9 the Fertitta brothers spent $28.4 million to acquire 1.52 million shares of Red Rock Resorts at an average price of $18.71 per share. Between Aug. 14-16, the Fertittas spent almost $13.6 million on 728,700 shares for an average price of $18.57 per share. The Fertitta brothers control 41.2 percent of Red Rock Resorts – almost 47.7 million shares.
Red Rock Resorts declined comment on the Fertitta stock purchases
The transactions took place following the company’s somewhat disappointing earnings announcement on Aug. 6, when $11.3 million of start-up costs and higher-than-anticipated operating expenses associated with the $690 million renovation of the Palms Resort and Casino drove down quarterly cash flow. In addition, last week’s downturn in the stock market, which saw an 800-point tumble on Aug. 15 contributed to the negative report. .
On the company’s Aug. 6 conference call with analysts, Red Rock CFO Stephen Cootey said the 18-month makeover for the Palms, which he likened to opening an all new hotel-casino, was a likely contributing factor.
“Like any new project, expenses open much higher than you would normally expect,” Cootey said. “You try to increase customer awareness; you try to make sure that the customer service is actually top notch.”
Following the initially stock purchases, Deutsche Bank gaming Carlo Santarelli said the Fertitta brothers were showing their belief in the Palms project, which was taking place at the same time the company completed a $192 million expansion and renovation at its Palace Station resort just west of the Las Vegas Strip.
“We view the activity as a distinct positive, further supporting the view that management believes the locals market remains, and will remain, healthy and that the Palms redevelopment will find its footing over time,” Santarelli said.