Wynn Resorts (NASDAQ: WYNN) shares have risen by 10.09% in the last month, coinciding with a notable investor increasing his investment in the casino firm, although certain analysts doubt that a takeover bid is forthcoming. 

In a recent report for clients, GimmeCredit analyst Kim Noland noted that Tilman Fertitta's recent increase of his Wynn stake from 6.1% to 9.9% has driven the shares up, but this does not indicate that he will become an activist and seek to take over the company.

"Wynnʼs common stock moved higher upon a recent report that Tilman Fertitta, a well-known gaming executive and investor, has increased his passive holding to 9.9%,” wrote Noland. “We donʼt expect near term shareholder activism or a change in shareholder rewards.”

Following a November 13G filing with the Securities and Exchange Commission (SEC) indicating that Fertitta increased his stake in Wynn, rumors have circulated that the owner of Golden Nugget might attempt to acquire Wynn. The 13G filing is utilized by passive investors; however, those market players may later transition to 13D filings to indicate activism. 

Fertitta Not Indicating Interest in Wynn Activism 

With the purchases of Morton’s Restaurant Group and McCormick & Schmick’s, Fertitta has a background of initially acquiring passive interests in firms before becoming an activist. 

Considering the billionaire's longstanding fascination with owning a casino hotel on the Las Vegas Strip and historical context, analysts recognize it is plausible he might pursue acquiring Wynn, though such chances are slim. So far, the owner of the Houston Rockets has not shown that he is seeking an activist position at Wynn or that he desires to obtain majority ownership of the company. 

There has been speculation that if Fertitta advocates for changes at Wynn, it may involve urging the operator to utilize its well-respected brand for growth in the US, where it presently operates only three gaming locations — Wynn and Encore Las Vegas, along with Encore Boston Harbor. 

Currently, the sole confirmed upcoming expansion to the operator's collection is Wynn Al Marjan Island located in the United Arab Emirates (UAE). Fertitta is the second-biggest individual stakeholder in the gaming firm, following only Elaine Wynn. 

Wynn Bonds Appear Attractive 

Although a takeover proposal might not happen in the near to medium term, other factors are backing the Wynn credit and equity investment arguments, such as a strong balance sheet, initial debt reduction initiatives, and stock buybacks.

"Wynnʼs global liquidity remains strong at near $3.5 billion, including cash and equivalents and revolver availability (Wynn extended near term maturity bank credit facilities),” added Noland. “At quarter end debt was $11.79 billion but on October 1,the company repaid the 4.875% senior notes due 2024 in the amount of $600 million and the remaining $600 million of Wynn Las Vegas senior notes due 2025, resulting in significant debt reduction. Wynn continues its shareholder dividend and recently increased its share repurchase authorization to $1 billion.”

Noland assigns an “outperform” rating to Wynn bonds due in 2031 with a coupon rate of 7.125%.