永利渡假村 (WYNN) 2016 Q1 法說會逐字稿

Welcome to the Wynn Las Vegas first-quarter 2016 earnings call.

I would like to turn the call over to Steve Cootey, Chief Financial Officer.

Please go ahead.

Thank you and good afternoon.

Joining the call on behalf of the Company today are Steve Wynn, Matt Maddox, Kim Sinatra, Maurice Wooden and myself here in Las Vegas.

Also on the phone are the operational management teams from both our Las Vegas and Macau properties.

Before we get started I just wanted to remind everyone that we will be making forward-looking statements under Safe Harbor federal securities law and those statements may or may not come true.

And with that I'm going to turn the call over to Mr. Wynn.

Well, we did have some information released prior to this about the quarter.

And we are going to discuss the various subjects that I am sure will be of interest to the people on the call.

The only other thing I could say is that since our early release to bring everybody up to date, it was very interesting that both Macau and Las Vegas had better Aprils than they did a year ago.

And that was in terms of profitability and that was very nice.

So without any other question I think we will let this go to questions.

(Operator Instructions).

Felicia Hendrix, Barclays.

Good morning and thank you for my question.

So, Steve, in your Investor Day, I just wanted to go back to some of the metrics that you used when you were talking through the scenarios at Wynn Palace and Wynn Macau.

You used a market GGR of $29.6 billion, which if you look at where consensus estimates are now for the market -- and I know it is impossible to forecast, but that is what we have to work with -- that implies about a 6% growth rate for next year.

So, I'm just wondering as you think about that number, is that being driven by visitation, by spending increases?

Just trying to get an idea about how you and your management team are thinking about the market revenue growth drivers for next year.

Well, Steve Cootey and Matt Maddox were the ones that discussed that and they are on the call and I think they can follow-up with your answer.

What we did, because it was a public meeting, is we actually used the consensus estimates using Hong Kong analysts and the US analysts for the market for next year.

So with any properties coming on board and the stabilization seen in Macau we thought that consensus was a good metric.

Okay, so you are just kind of using that as a benchmark and then your views of what market share and EBITDA margins would be?

That is correct.

Okay.

So then just moving on to my next question -- and Steve, this is on your Paradise Park project.

And so now that we have time to digest the initial announcement, I was just wondering could you delve deeper into some of the elements you discussed?

I know the Board still has to approve it, but I believe you said at the Investor Day it could amount to about a $1.5 billion project.

So I was just wondering is that the right cost to think about?

And then also, as you think about the different aspects of the project cost, can you walk us through that and how you are thinking about driving an appropriate return from that spend?

Yes, I can.

And if you recall, what I said was that until all of the costs are complete and compared to the revenue, and we know that the business plan is as good as we think it is, I am not going to take it to the Board.

So my management team, and all lot of it is myself and the group that have created these hotels in the last 40 years, we have been obsessed on a daily basis and on weekends with a whole team of creative people that include former Disney animators that -- I sit when I do these kind of things with animators very much the way Walt Disney did.

And as we work on ideas one of the men sketches in real time, the perspective drawings, the elevations.

The lake is -- when I had the Investor Day we showed the West End of the lake which was 1,300 feet by 1,300 feet.

We realized that our development sites that were further to the east on the corner of Desert Inn and Paradise and on Paradise itself and on the south side which is Paradise and the side that backs up to Sands Road, we had these rather large development sites of 20, 19 and 17 acres.

And we wanted to extend the lake to create more beachfront property.

So we extended the like another 600 feet and that happened after the Investor Day.

Now picture this in your mind when you understand how we do this.

Here is this body of water that has a boardwalk surrounding it that is over a mile long, it is 5,800 feet, and there are all of these properties and offerings of shopping, retail, there is even little cul-de-sacs of little villages like a little village square off them.

It is a discovery place for people walking and staying in the hotel.

Now we show a 1,000 room addition that is connected to Wynn that is totally integrated with the country club restaurant as it is presently known and the rest of our hotel.

But then we show the rest of this property with its convention and meeting space around it and the development sites that are beachfront.

What we realize is that in order for this to have the critical mass that is irresistible to the public, it has to be a place that is irresistible to the public.

And so therefore, what I didn't show on Investor Day but -- because I didn't have the model ready, is that in the middle of this 1,300 by 2,000 foot piece of water is a mountain, an island, that is 8 to 10 stories tall, but it is an irregular topography.

It is a slope up to two twin peaks that are connected with a rope bridge.

And built into the side are cabanas and other special effects platforms, some of which are going to be occupied in the daytime by people and very luxurious premium kinds of recreational spots.

And then there is a beach bar with white sand.

And then from our convention center on the north there are zip lines that take people to the bar and from the side of the mountain there are zip lines that take them back the other way.

There are ferries, little electric ferries that go out to the dock at the beach bar.

That is to say this place is populated and at night the twin peaks are launching positions for our fireworks show and for other special effects that make up an entertainment moment at 9:00 to 9:30 or so at night.

And the water ski show is in the afternoon at 3:00.

So all of these elements make up this world behind here that we refer to as Paradise Park.

When I had the Investor Day I had some preliminary stuff that we had worked on that was available to show, but we had stuff that wasn't in model form where we had taken the project further.

The creative process in the design development phase of something like this is very dynamic and it changes on a weekly basis as we layer in all of the attractions and the things that make it irresistible to the 800,000 people a week that come to Las Vegas, the 118,000 people a day that promenade up and down that stay for 3.5 days and turn over twice a week.

It also adds immeasurably to the sex appeal and value of the undeveloped real estate that is also fronted on the waterfront and viewing the island and enjoying all the water interactive things that take place.

So, that is a little bit more conversation about Paradise Park.

And you can understand that as these ideas are fleshed out, then we will be able to decide on the cost per foot to build the structure.

In effect it's a hollow building that looks like Fantasy Island on the outside, but is hollow on the inside, very much like the small one that is in front of Wynn and the Lake of Dreams.

Only this is taking that idea much further into another realm altogether.

But this is not Epcot; we are not just building a body of water with a promenade around the edge.

The American public has seen that before.

When we do something here we do something that hasn't been seen before and offers people a chance to enjoy it, explore it and hopefully they will find that irresistible.

Of course that is the developer speaking and you have to take me -- the kinds of things I say with a grain of salt I guess.

But we have been at it for 45 years and we have always managed to keep that promise.

Thank you for that.

And just a quick one for either Steve or Matt.

Can you just -- the margins in Macau, they are higher than they have been for a very long time.

Was there anything in particular driving that?

We did -- if you look at the press release you will see our provision for doubtful accounts is down.

So we did have an $8 million reversal of a debt that was fully collected.

So that did impact EBITDA.

But remember we also are carrying --.

Yes, let's remind -- $25 million a quarter and I can now tell the investment community that $100 million a year backpack we have got on the Peninsula property will come to an end on June 30.

Ian is going to transfer the $25 million a month that he is carrying from Wynn, or $8.5 million a month, onto the new hotel where it belongs.

And so, we are going to see the Peninsula property efficiency take a rather dramatic jump, which I hope will more than offset any of the kind of transference that occurs within a company when they open a second property.

That is $25 million a quarter and this is the last quarter of that package being carried by the other hotel.

Its profitability is greater than it has appeared.

Thank you.

Shaun Kelley, Bank of America.

Good afternoon, everyone.

Maybe just to clarify on that last point, but just to be clear, are the expenses moving over at beginning of the second quarter or not until the end just so we can think about the models and the margins for next quarter?

Day one of the third quarter.

Day one of third quarter.

Perfect.

And then maybe just one bigger picture question, Steve, but I was also intrigued by some of the answers around the Paradise Park comments from a moment ago.

And a large competitor on the strip reported earnings this morning and also mentioned about some of the programming that they are doing around the park, their park project in talking a little bit more about accessible price points.

And I'm just kind of curious at a high-level when you think about what you are doing and what the goal is behind Paradise Park.

Is there an interplay here that you are trying to accomplish between the high-end and luxurious environment that you create at Wynn with a bit of a more mass-market appeal?

Or how do you want to balance those two elements in terms of accessibility?

Great question.

Look, what do we do here now?

We offer a more luxurious property with all kinds of choices in food, beverage and nightclubs for the young people, 5,000 people a night in excess and the beach club 5,000 people a day.

These are not casino customers, these are people who are in search of a different form of recreation and we satisfy their demand.

And we benefit from that to the tune of $30 million or $35 million a year, for example if we are talking about nightclubs, in EBITDA.

So when we talk about Paradise Park, first of all, we put 1,000 rooms that are going to be the encore room with a 40 foot length room with a sitting area, they are petite suites, and we're going to add a balcony on each room facing the lake in a 17 story structure.

Now that is probably going to be one of the most desirable hotel rooms in the country.

I mean fireworks every night and all of this lunacy going on outside, staring at these remarkable scenes that we are going to build with activity going on.

That certainly goes after a higher value customer.

And then we are adding these gorgeous meeting rooms both as an add-on of an 85,000 foot meeting room and 50,000 feet -- I mean 85,000 ballroom and 50,000 feet of meeting rooms next to [La Fete] in the Wynn side.

And then we're adding a 25,000 and a 50,000 foot ballroom and I guess another 35,000 foot of meeting rooms on the new side, on the Paradise Park side.

All of these rooms and facilities have terraces and open areas, open onto this show that is in the middle.

So to that extent we are playing, aren't we, to a high price point.

But on the other hand, I am going to charge every single person $20 to $30 to experience Paradise Park whether I do it as part of the room charge, as a resort fee per night or whether I do it for people coming in off the street, part of those 118,000 people a day that are visiting the town.

I'm going to charge for it and that is going to make this place accessible.

It is $100 to go to Disneyland; we are going to charge $20.

But you are talking about revenues of $300,000 or $400,000 a day if anybody shows up.

And this is high-margin business.

So to one extent, as we do in our existing 4,700 rooms, soon to be 5,700 if this project proceeds as planned, we will be getting mass business and we will be increasing our occupancy in the existing rooms and creating occupancy in expensive rooms on the lake.

That is what we are trying to do.

But I made a point that is worth repeating incessantly.

You cannot get dynamic with gaming equipment.

It is only gaming equipment, it is always the same everywhere in the world, at the most humble regional box of slots to the fanciest place.

The trick is how many people come through the casino and what is their average income, at what level in the economic scale are they?

That is how we manage to increase and break the record in casino revenues at every place we have ever built since 1989.

Nothing really -- conceptually in our planning nothing is really changing.

Wynn Paradise Park is a further extension of the same mentality taking advantage of imagination and fantasy on property that we own for zero with water rights that we own for zero, and we are the only ones that have them at this size.

And we are going to do it with solar power and we are going to use less water than a golf course.

So we are going to be very green at the same time.

I hope that responds to your question.

Thank you very much.

Carlo Santarelli, Deutsche Bank.

Thanks and good afternoon.

Just on the topic of the April trends you mentioned, Steve.

Could you elaborate maybe a little bit more just on what specifically in Macau you are seeing that is improving year-over-year?

Obviously your mass business has been a lot more stable just in terms of what you saw in April that is encouraging.

Ian, would you like to talk about that?

Or Linda?

Sure.

April was another very steady month.

The trend of our VIP business junkets and our direct business being stabilized continued.

Mass continued to grow in the mid-tier for us.

60% of the room inventory is allocated to mass and slots right now.

And we were also impacted by two extremely strong days at the end of April.

The May holiday actually kicked in the last two days of April and we held really well.

So we got a really nice bump at the end of the month.

But in many cases it is just continued stability throughout.

Retail was up sequentially month over month, quarter over quarter, so we are seeing some signs that the worst is over.

Great, thank you.

And then as you guys have kind of honed in on the $25 million a quarter of the labor expense savings, which I believe is consistent with what you guys had said at the Analyst Day nearly a month ago, do you have -- is it safe to say that to come up with that number you have a relatively decent idea of the table capacity you expect to have at Cotai?

Yes.

We have a positive expectation but no guarantee.

So I think it is probably good to stay away from that because I wouldn't want to be perceived as putting myself in the government's shoes.

Understandable.

Thank you.

Joseph Greff, JPMorgan.

Hello, everyone.

Steve, maybe you can talk about what you think will come out of the government's midterm review and then how the government is looking at the conclusions drawn there for any future policy changes.

We have some idea of what the review had to say in general terms.

And that was that the upgrade, the expansion of the appeal of the Macau market was successful in every way, either met or exceeded the goals that were set early at the millennium.

It also resulted in inflation and the cost of living which has put some pressure on the local people as far as their rents.

And that has resulted in the government putting pressure on us to keep raising wages which we have all done.

In our case I think we have led the market because of our stock ownership and other things we have done.

And the other hotels have also been rather aggressive in responding to the government.

And I think those are the main ingredients unless, Matt, you know more or Gamal or Ian or Linda -- do you know more about it?

And you know, you have heard the question.

And I think any of my people in China that want to respond can feel free to do so.

Based on the significant gathering of information it seems to be a very fact driven analysis of what has happened over the last 10 years.

And we are not expecting any negative aspect to it.

It is really just a health check to see where we have been, what we have promised and what we have delivered as an industry and then to set some markers for the future.

There's is definitely an indication that there will be no surprises.

Great.

And then Steve Cootey, just a couple of financial-related questions.

Interest expense was down meaningfully, can't be all related to capitalized interest.

What was going on there in the 1Q?

It's actually all related to capitalized interest.

So we took the opportunity to capitalize about $25 million of interest we should have capitalized in last year related to Palace.

Got it.

And then one final question, cash balances in Macau?

Cash balance in Macau about $865 million as of March 31.

Great, thank you.

Thomas Allen, Morgan Stanley.

Good afternoon.

A couple of your peers in Macau reported having to take higher than normal bad debt provisions this past quarter.

Can you just talk about the overall collections environment and the junket environment in general?

Thanks.

Yes, sure.

It is Matt Maddox.

So as I talked about before, if you noticed our bad debt provision was actually lower year-over-year because we are collecting debts that we fully reserved.

And we haven't really seen any change in our collection process, it is very stable in our direct program right now.

But you know (multiple speakers) we have got a history of being very conservative in that area.

And nothing has changed after 45 years.

Helpful, thanks.

And just quickly to follow up on that, Matt, that reversal wasn't just related to a single player or anything like that, that was a more general reversal.

And all folded into my next question is there has been some talk about --.

Wait.

Hold it.

There was one piece of information where it was a single person.

Yes, that is correct.

That large reversal was a single person.

It was a junket operator.

Okay, helpful.

I don't know how important it is, but I just wanted to correct that.

Okay, perfect.

And then there has been some talk in the market about proxy betting being regulated more in Macau.

Any thoughts around that?

They've ended it.

Okay, as of now it is illegal, there is no more phone betting.

They stopped it today, the DJIC made it official.

It is finito.

Any thoughts on how big of an impact that could be?

There is no more phone betting.

It is insignificant to Wynn I can tell you.

Okay, perfect.

Thank you.

But it is officially not permitted.

So no one will be doing it as of now.

Perfect.

Thank you.

Robin Farley, UBS.

Great, thanks.

Just looking at the performance of the other resort that opened most recently in Cotai that has maybe ramped up a little slower than expectations.

Does that sort of concern you about when you think about your property opening this year and another property opening in a pretty close timeframe?

Do you think there is any conclusion to be drawn from the slower ramp up that this other property is seeing?

Well, I feel badly for our sub-concessionaire, Melco, who owns 60% of the place.

I'm sure they are not happy with the results.

Lawrence Ho is a very smart guy and I am sure you will see improvement there.

Robin, if I understand correctly, you are wondering if that impacts our expectation on Palace, right.

That is your main (multiple speakers).

Yes, and opening so close to -- in such a close timeframe to another project as well later this year.

Parisian?

Yes.

Okay.

We have repeated many times that we expected a competitive environment.

Matt, at the Investor Day, took quite a bit of time to show where the business was, where does casino activity in Macau really come from.

And that there has been this false identification of mass versus premium.

The junket operator with the dead chips or the low level mass table games with the buses on the other hand.

And nothing is further from the truth.

That is a misunderstanding.

The bulk of this market ranges rapidly up into what we call and I think we tend to categorize this a little bit too generally, mass premium.

But the money in Macau is all based upon the better customer, both the cash customer with the regular chips and of course the people who play with the non-redeemable chips.

But the money in Macau -- when we say mass we are not talking about Circus Circus for example at one end of the Las Vegas spectrum versus Wynn or Bellagio.

What really goes on in Macau is all the money is in the better category of player at every level.

Now the people that design these various new hotels, they make a bunch of decisions long before groundbreaking about what they are going to show the public, who they want their customer to be.

And they define these things by the size of their rooms, the width of the corridors, the quality and selection of restaurants, the entire treatment of the interior decor, the flow of the elements of the hotel, which incidentally place specific emphasis and priorities on certain elements versus others because as you create the flow in these places you demonstrate your priorities to the public.

This hotel, the Wynn Palace, was designed to appeal specifically to the heart and soul, the premium customer in Macau.

The Studio City project was articulated by its developers as a place that was designed to appeal to the mass, the lower end.

Parisian has a bulk of rooms, many of whom are much smaller than ours.

The cost factors associated with these places, all of the decisions that are made by the developers define the product when it finally is launched.

We have seen the competition in Macau, we have studied them with respect and in some cases admiration for their execution.

But I'm going to say it one more time.

We are not in that ZIP Code.

We are not in that area code.

When you see it, Robin, you will understand.

This place has a different -- a level than Bellagio, Wynn Macau, Wynn Las Vegas or Encore Las Vegas.

This is a different place.

So it is designed in every single element to appeal to that part of the market that goes from a 1,000 unit average bet of Hong Kong dollars to 1 million.

And so, when we look at Studio City we don't see any comparison with us.

Now when you asked me about Parisian and how do I feel about it opening right after us, I don't really know what Sheldon did, because we haven't seen it, and what his thinking was and his colleagues and where they were going to position Parisian.

But I suspect that no one is directly challenging our market position at this point, unless SJM does.

There is that character with the red Rolls-Royce that is building a place called Louis XIV that has 100 rooms or something and doesn't have any tables yet, but it is over in Coloane.

I think his rhetoric is that it is going to be the fanciest thing in the world, the 100 rooms on Coloane.

We don't stay up late night worrying about him.

But in terms of the Parisian, as we have heard -- Sheldon Adelson prefers to stay in the middle or what he calls the fat part of the market.

And they do a very good job at that.

We are positioned differently, Robin.

If you were on our side of this I think you would probably agree that is the only way to go if you are Wynn and that is what we have done.

So we don't have much heartburn about Studio City.

I hope for their sake that it is a big success and sooner or later I believe that Lawrence Ho and James Packer will figure that out and make that place perform.

And we do like the long-term prospects of Macau.

We think the market will catch up with us all sooner or later.

In the meantime, we may snatch a little market share here and there.

Okay, great.

That is helpful.

My other question was on Vegas and the project that you have talked about, $300 million in EBITDA.

Can you walk us through a little bit -- I mean there's a 1,000 room hotel.

And so, if we assume it will do premium to the hotel rooms that you have now.

But that still probably doesn't get -- can you talk about what some of the other pieces of EBITDA incrementally from that project may be to kind of get to a number in that $300 million range?

Well, I think that -- I wanted everybody to know everything that was on our plate for the next five years, and so that, as I said at the meeting, we were playing our cards face up.

But I think that the specifics of the math on Paradise Park should await more specific conversation when we can equate revenue to costs and really be responsive to that question.

But remember, Robin, it is not a project until my Board says it is a project.

And all of us in management have more work to do before we present it for the green light vote at the Board level.

And because of the complexity and the really transitional impact that this project will have on Las Vegas, we want to make sure that we have done our homework and been very complete.

And then we are going to discuss all this in great detail with you and the members of the investment community, the buy and sell side people in enormous detail.

All I can say is this point is in my view it is overwhelmingly good news.

It is my favorite thing in my career that I have ever done.

It is the most fun I've ever had.

In my opinion it's the most -- it's the safest and most clear-cut opportunity in terms of real estate development that I've ever seen my life.

So with that we proceed happily along the road of completion.

Okay, great.

Thank you.

Harry Curtis, Nomura.

Hello.

I just had one question turning to Massachusetts, which seems a bit like whack-a-mole.

When Boston gets resolved then another city pops up.

And wondering what you think of the challenge process.

Do you think once you get through Somerville that that really is the end of it and you can dial up your investment?

The answer is we will get through Somerville and we will be in construction this summer.

And the property in Boston will be unlike any other casino outside of Las Vegas in the United States of America.

And I make that statement unequivocally.

It is designed, it is drawn and it is virtually priced.

We have a few last-minute tweaks that we can do in value engineering, but it will stand alone against anything that exists other than the city of Las Vegas or the strip in Las Vegas period.

Period.

Look, remember I said at the Investment Day that both the Palace in Asia and the Wynn in Boston -- in the metropolitan area of Boston -- both of them are not only great investments for this Company but they are case studies going forward for any other city that wants to try get in Asia, any other country or any other city in America that wants to have a grand hotel that employs people and is a credit to the community where gambling is subordinated but available, but that the resort and destination aspects of the building are unequivocal.

The Massachusetts project will be exactly that sort of case study.

And we think that is an important part of our future.

Instead of having to do the developer speak like I am today talking about Paradise Park, we can just keep quiet and say here, look at this.

Here Seoul Korea, Taiwan, anyplace else, look at Wynn Palace, we have nothing else to say.

We rest.

We don't have any body copy, we have no developer speak, just look at what we have done.

I know a lot of the guys in my business talk about how great their buildings are.

Well, get ready.

In the month of July there is a new girl in town and we are going to meet her face to face and all the boys and girls in Macau can come take a look.

This is a game for adults.

Very good.

Can I just ask one other question on turning back to Vegas?

Matt, can you give us a sense of how the balance of Vegas' bookings are looking this year?

And do you think that 2017, based on what is on the books today, looks as good if not better for 2017?

Well, Maurice is here too.

So looking forward we continue to see the same type of growth that we had in the first quarter.

We anticipate our revenues on the hotel side to be up around 5%.

As far as what is on the books, we feel very confident that we have a nice stability in all segments.

And like I said, we continue to look at revenue growth.

And a lot of that is -- when we talk about revenue growth for us we are focused on cash revenue growth.

And so, if you look at our first quarter, we were up $6 million in overall hotel revenue and all $6 million was in cash.

We concentrate on cash.

And any thoughts on 2017 forward bookings?

Again, we look very healthy.

We have strong forward bookings in our convention area, so we are really satisfied with where we are at right now.

That is very helpful.

Thank you.

David Katz, Telsey Advisory Group.

Good afternoon.

If I can just follow up on Harry's question, because I was thinking along the same lines about what the gating factors are or could be.

Is this -- I don't mean to be too repetitive about it, but is this Somerville challenge, is that really the one gating factor to starting to spend some money and get in the ground?

Yes.

In a word, yes.

Okay, and if you could just give us an updated thought on when approximately it might open now that you've gotten us excited about it.

Suffolk Construction -- John Fish brought his old management team for their quarterly retreat and he wanted them to see what Wynn was really like.

So they had the retreat of all of his company in this hotel.

They didn't even tell us they were coming, they paid retail here at the hotel.

But we had a chance to talk to them and John has said 28 months of construction.

So that is straight from the builder and he signed his name to it.

And if I may just --.

With liquid data damages.

Understood.

There are still some machinations about other casinos in the area and on that side of the state.

Does any of that factor into your thinking or strategies about what you are doing?

No, as a matter of fact that one casino that is being built is being managed by the folks from Malaysia, from Genting.

And I had coffee with K.T. Lin day before yesterday -- yesterday actually, and it is very much like Macau.

It is a different market share than we are in.

This thing in Boston is pure Wynn.

It is the Wynn Las Vegas in a new form moved to Massachusetts.

So naturally it is going to appeal to a different kind of customer than the stuff that is up there now.

And it was designed to do so.

So I don't think it affects our expectation about revenue and the opportunity there if that is your question.

That is my question.

Thank you very much.

Joseph Greff, JPMorgan.

Just one quick follow-up.

Last month, Steve, the Board authorized an increased share repurchase authorization.

Can you talk about how you are thinking about buybacks right now and actually why did you up the authorization?

Well, 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.

And my Board feels that way and so do I. 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.

As long as the short players fool around for a buck or two that is fine.

But when shorts -- the exchanges really don't enforce the rules of make it shorts.

So it is an unconscionable manipulation of the stock that occurs.

They open up every morning and the high-frequency traders and the shorts have a ball selling shares and then value buyers step in in the afternoon and they cover the shorts.

It is regular casino activity.

The activity on the stock markets is in my view poorly regulated and irresponsibly policed, especially with regard to short sales.

And when it gets out of hand we see a lot of shorts because of China.

Because we are such a clear China play we probably had a bigger percentage wouldn't you say, Steve Cootey?

Yes, that is right.

Short interest in our shares.

14 million shares as of (multiple speakers).

14 million shares.

And although I can't do nothing about it myself I take advantage of it when it gets out of line and buy shares.

I mean it is 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 market has got more volatile, more stupid as a gambling game than ever before.

And I look at it that way to be honest with you.

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.

If you read Flash Boys it is all spelled out for you.

And if I execute an order I will use the [IX] -- I'll use Brad Katsuyama if I was buying something so that I couldn't be fronted by the high-frequency traders, but there is enough a lot of that going on.

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 is not the way it should operate in an honestly or intelligently run exchange, but that is the thing.

All those guys sold their dark pools and their order flow and the positioning on the floors of the servers to the HFTs.

And it has made a couple guys that I am friendly with very rich because they are high-frequency traders.

But I don't respect the activity.

And I am severely critical of it and don't mind saying so either.

Thank you.

There are no further questions at this time.

Okay thanks, everybody, for joining.

We will talk next quarter.

This concludes today's conference call.

You may now disconnect.