[Beginning of Cramer's verbatim comments for this segment...]

Jim:          There are eight IPO’s expected to price the United States this week… and while I am talking about some of them in a multi day know your IPO’s series… the most important IPO of all is not happening in this country… it is not listed on the NYSE or the Nasdaq, no… it is in China… on the Hong Kong stock exchange… I am talking about the Wynn Resorts (WYNN) IPO of its Macau business… the road show for this one, where the company and the underwriters go around drumming up demand for the stock, starts today… we expect it to list in Hong Kong on October 9th...

Now, other shows talk about the IPO’s, and we have read a lot of articles about them… they endlessly tell you hey this is going to be interesting… but they do not tell you whether you want to be in them or not…
on Mad Money we try to teach you how to analyze IPO’s and use these filings as examples of how the IPO market can be played to help you to try to make the most money with these deals… of course, while taking on the least amount of risk… I do not want you going all the way to Hong Kong to buy shares in Wynn’s Macau business… although, I am sure that it will be a bang up IPO… the best play here is the one that I have been pushing for months… and that is to buy Wynn… because by selling off 25% of its Macau business… it can finally unlock what is known as hidden value in this country.

See right now there is no why for investors to independently evaluate Wynn’s piping hot Macau operations… but when the IPO happens, that will change things… and even though the stock is already up huge in anticipation of the IPO… Wynn is up 73% since I recommended it on this show on July 21st at $29... precisely because I had gotten wind of this deal… I still think there is room left for Wynn to go higher… but I do believe that it will stall out here… as people who watch our show, and knew this filing was about to occur… sell on the news… because if you bought Wynn when I told you to, you are being a little piggish if you do not sell something… as a matter of fact, I think this is the perfect opportunity to take some profits… play with the house’s money perhaps, in a great casino stock… and then I hope that it comes down over the next weeks leading up to the deal.

I guess what I am saying is even though I am a huge backer of Wynn… I want to sell a little bit of the hoopla here… and buy the substance at our price… not the market’s… why am I so confident that there is still some upside left here… we know that the Chinese Communists love to gamble in Macau… the one place in the whole People’s Republic where gambling is legal…the only one… already, it is the largest gaming market in the world… this has been a huge secular growth trend for years that has made boat loads of money for the six casino operators that have been granted concessions for Macau gaming operations.

Now I am betting the Chinese investors are looking for a better way to play Macau… and would rather invest in it directly… which is why this is going to be sizzling… given the valuation that the Chinese stocks are currently getting… it is listing part of its business in Hong Kong is a great way for Steve Wynn to boost its share prices… Steve Wynn has been fabulous for shareholders… he has also made you money in the bonds… he is a remarkable figure.

The details… 25% if its Macau business… 1.25 billion shares at between $8.52 and $10,08 Hong Kong dollars a piece… under the ticker 1128... trying to give you all of the background that I can… raising as much as $1.63b for Wynn… we have got JP Morgan, Morgan Stanley and UBS running the show… Wynn has already secured investments in it from a number of tycoons in Hong Kong.. but I expect buyers to come in from all over the world… given how hot Macau is… and the fact that this will be the best pure play on it… we do not have a lot of pure plays… there is this one that I told you to get out of it… Melco, that was the disappointing Australia trying to capitalize on it.. this will be much better.

Right now Wynn has two hotels in Vegas and one in Macau… with a second expected to open in the first half of 2010... unlike other casino companies, Wynn is funding the development and construction costs out of cash flow from operations… so many of these casino operators gamble… they gamble, you are not supposed to gamble… they gambled taking down enormous amounts of debt… which makes this play the safest way to play Macau… Steve Wynn was incredibly bullish… you have got to listen to him on the conference calls… he is such a natural… he was incredibly bullish about the new Macau resort on the conference call.. here is what he said “It is on schedule. It is on budget. It is being built out of revenue. It will open up this spring. And it is the best thing that we have ever done in our lives. It is the most beautiful building that we have ever built. At least in my 40 year career. 10 rooms per floor. A completely integrated all suite and village hotel with its own spa, casinos, and other things. Right smack in the middle of Macau.”… it is my job to tell you who has credibility… and Steve Wynn has credibility.. the last time that he made these other promises, you got a huge gain… he does not say things idly.

In the last quarter Macau made up more than half of Wynn’s revenues… 60% of its properties earnings… before interest, taxes, depreciation, amortization… Macau is basically bigger than the US for this company… growing at a much more rapid clip… and these numbers are from a quarter where Macau revenues were down 25%… because the Chinese government tightened VISA restrictions on mainland China… that is right, so it was under difficult situations.

Alright, so then you have to say why if Macau is so great Jim, why do I think that just plain old Wynn is the way to do it… why not just jump into a hot Hong Kong IPO… no, because buying Wynn lets you play the IPO with less risk… remember, we are already up 70% in anticipation of this deal… and I do not think that it is unreasonable to see more gains ahead… it is all about unlocking value… currently Wynn’s enterprise value, which is what it would cost an acquirer to buy the company at its current share price… is $11.6b… but the street thinks that just this Macau portion of the business could be worth $7.2b… if you look at the details of the deal… what it says is that Wynn’s Macau business is at $7.4b… so what does that mean for the rest of the company… it is being valued at a little bit more than $4b… okay, that is not as quite as undervalued as when I was recommending the stock back in July… but I think Wynn’s Macau business will end up being more than $7.4b after this huge, and hotly anticipated IPO… which was the talk of the whole world today… and it will send prices of the parent company higher.

Get this… and it is possible… I have only seen this a couple of other times… I saw it with Palm once… it is possible that we could see the Macau portion of Wynn Resorts (WYNN) be worth more than all of Wynn itself… once this deal starts trading… that is the tail bringing up the dog… we want to own the dog.

Here is the bottom line…

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Bottom Line:     I do not think that you should try to get in on the Wynn Macau… I want you to stay in Wynn Resorts (WYNN)… that should shoot still higher off of the IPO of the Macau assets… I think that this will stay a great play at least until Las Vegas Sands starts diluting the market with its own Macau IPO… you own Wynn because of me… you bought it at $39 because of me… okay, ring the register a little… you want to get in on Wynn… let the profit taking occur.. and then pounce… I sense the stock will retreat to $64, $65... before bouncing up to my $90 price target for year end… when we see how much value Macau is creating for all of Wynn shareholders.

 

[verbatim recap]

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