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Steve Wynn allegations punish his company's stock

Ever since the news broke about Steve Wynn, investors have been selling shares of Wynn Resorts.The stock is do...

Posted: Feb 6, 2018 11:40 AM
Updated: Feb 6, 2018 11:40 AM

Ever since the news broke about Steve Wynn, investors have been selling shares of Wynn Resorts.

The stock is down 18% and at least one major institutional investor, Thornburg Investment Management, confirmed to CNN that it sold its entire stake of 891,000 shares on January 26. That was the day a Wall Street Journal article revealed allegations of sexual misconduct by Wynn, its founder and CEO. Wynn has denied the allegations in the Journal story, calling them "preposterous."

Thornburg, which had been the 15th largest institutional investor in the company, wouldn't comment on the sale other than to confirm that the Journal report was "material" to its decision.

Shares in Wynn Resorts have been turning over in a big way. The day the Wall Street Journal report came out, 22 million shares traded -- most of them after the story published. And nearly 26 million shares were traded the following session. Each day had more than 10 times the average trading volume for Wynn Resort shares. And even though the shares haven't moved as much since the plunge those first two days, trading volume has remained elevated.

Institutional investors owned the overwhelming majority of the shares -- about 74% -- as of the end of September, the most recent figures available. In addition, 22% of Wynn shares are held by company insiders, such as Wynn himself, who owns nearly 12% of the company.

Insiders like top executives or board members need to file with the SEC within days after they buy or sell shares, and none have done so since the news broke about Thornburgh's sale.

Individual investors who aren't insiders hold only about 4% of the shares.

Related: Steve Wynn remade Vegas, but China is where he makes the real money

So for the stock to lose nearly 18% of its value in just a few days, institutional investors must have been selling heavily. Details of those sales won't be public until firms disclose their holdings in filings in the coming weeks. Unlike company insiders, institutional investors generally only have to disclose their sales quarterly unless they hold 5% or more of a company.

Of course for everyone selling shares, there is someone else buying, trying to take advantage of the cheaper price. BlackRock boosted its Wynn stake by about 243,000 shares, increasing its total stake from 4.8% to 5% of the company, according to a filing Thursday. The company said it does not comment on specific investments.

Even with all the allegations of sexual harassment and misconduct that have become public in recent months, the Wynn case is the first in which the CEO of a major publicly traded company has been accused of misdeeds.

"This is uncharted territory," said Dan Wasiolek, an analyst with Morningstar.

Wynn Resorts is included in the S&P 500 so is held by funds that track the popular index. Those funds typically would only sell its Wynn holdings if Wynn Resorts were dropped from the S&P 500.

Vanguard is Wynn's largest institutional shareholder, with 8.2 million shares held mostly in index funds. "We won't divest from a company unless it falls out of the underlying benchmark," said Vanguard spokesman Freddy Martino, but he declined to comment specifically about Wynn.

The two biggest shareholders in the company are Steve Wynn himself and his ex-wife Elaine, whom he has been battling in court. Elaine Wynn owns 9% of Wynn Resorts stock, but probably can't sell it due to restrictions set in their divorce settlement.

Steve Wynn hasn't sold a single share of his stake, according to company filings. That has cost him dearly -- almost $440 million since the day before the Journal story detailed the allegations against him.

Mississippi Coronavirus Cases

Data is updated nightly.

Cases: 331863

Reported Deaths: 7494
CountyCasesDeaths
DeSoto22855279
Hinds22625437
Harrison19462326
Rankin14765286
Jackson14233251
Madison10658227
Lee10398178
Jones8713169
Forrest8164157
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Pike3511111
Tate348988
Alcorn343174
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Scott330175
Simpson313690
Copiah311467
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Holmes194974
Clay191554
Tallahatchie181542
Clarke181480
Calhoun177332
Smith175334
Yalobusha169240
Walthall140448
Lawrence137026
Greene134934
Amite131843
Noxubee131135
Perry130838
Montgomery130644
Carroll124531
Webster116732
Jefferson Davis112934
Tunica110827
Benton104425
Claiborne104231
Kemper100329
Humphreys99033
Franklin85923
Quitman83519
Choctaw80919
Wilkinson73232
Jefferson69028
Sharkey51518
Issaquena1696
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Alabama Coronavirus Cases

Cases: 565510

Reported Deaths: 11468
CountyCasesDeaths
Jefferson828061584
Mobile44938853
Madison36534532
Tuscaloosa26589465
Shelby26409255
Montgomery25598623
Baldwin23319324
Lee16691179
Calhoun15030332
Morgan14877288
Etowah14563368
Marshall12723235
Houston11302292
Elmore10576217
St. Clair10449251
Limestone10420158
Cullman10198204
Lauderdale9883253
DeKalb9226191
Talladega8705187
Walker7545286
Autauga7388113
Jackson7216117
Blount7147139
Colbert6522142
Coffee5962131
Dale5224117
Russell463942
Chilton4603117
Covington4502125
Franklin439781
Tallapoosa4343156
Escambia414782
Chambers3813124
Dallas3674163
Clarke361562
Marion3354106
Pike323179
Lawrence3176101
Winston289672
Bibb276165
Geneva267383
Marengo257367
Barbour241860
Pickens238862
Butler233571
Hale230578
Fayette223863
Henry203345
Cherokee192347
Randolph192244
Monroe190241
Washington174539
Macon167252
Crenshaw163457
Clay161859
Cleburne158445
Lamar149138
Lowndes143854
Wilcox128431
Bullock125342
Conecuh117730
Coosa115229
Perry109628
Sumter107532
Greene95935
Choctaw63125
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