Date: November 14, 2024, 01:28h. 

Last updated on: November 14, 2024, 01:28h.

Shares of Wynn Resorts (NASDAQ: WYNN) experienced a surge in value after Tilman Fertitta raised his stake in the company to 9.9%.

During midday trading, Wynn saw an almost 9% increase in value on significantly high trading volume, following a regulatory disclosure that Fertitta, owner of the Golden Nugget, had increased his ownership in the company.

A disclosure in Schedule 13G, released by the Securities and Exchange Commission (SEC) on Wednesday, revealed that Fertitta now holds 10.9 million shares of Wynn, representing 9.9% of the company’s outstanding shares. This marks a substantial increase from his previous holding of 6.91 million shares, or 6.1% of the company, acquired two years ago.

Fertitta’s Potential Activist Role at Wynn

When Fertitta first invested in Wynn two years ago, he did so as a passive investor and has maintained that stance since. However, speculation has arisen that he may transition into an activist role, advocating for changes within Wynn. This speculation has resurfaced recently.

It’s likely not going to be passive for long,” said CNBC’s David Faber on air. “The high likelihood here is it becomes a D.”

The 13G filing indicates a passive investment, while a 13D filing is required for activist investors. Fertitta has not publicly announced any intention to become an activist at Wynn or the specific changes he may advocate for should he decide to shift from a passive stance. While some activists seek board seats, it remains uncertain if Fertitta is pursuing this route. Presently, he is not a member of Wynn’s board of directors.

Possible Takeover Speculation Surrounding Wynn

Following Fertitta’s initial investment in Wynn, rumors circulated about a potential takeover bid by the Golden Nugget owner. Much of this speculation stemmed from Fertitta’s longstanding desire to own a casino hotel on the Las Vegas Strip, a property type he currently does not possess.

Although initial takeover rumors subsided, with Fertitta seemingly content with his stake as the second-largest non-institutional investor behind Elaine Wynn, a potential acquisition of Wynn remains conceivable. The company’s current market capitalization stands at $9.34 billion, suggesting that any suitor would likely need to offer around $11.5 billion or more to initiate acquisition talks.

Fertitta’s investment in Wynn has proven to be profitable. Based on the original 13G filing from October 2022, it implies that he built his stake in the third quarter of 2022 when the stock was trading below $70. Currently, the stock is nearing $94.