While the market continues to struggle, sin continues to be a hot ticket for investors. In fact, the ISE SINdex (SIN) has rallied steadily from its March 2009 low of 47.98 to gain more than 128%. What’s more, the index has closed only one month below the support of its 10-month moving average since April 2009. In this article, I take a closer look at three casino operators that are outperforming the broad market.
Las Vegas Sands ( LVS ) is the owner and operator of the Venetian Casino Resort, which it built over the ashes of the bulldozed Sands Hotel, and which brings a touch of Venice to the Las Vegas Strip. Replete with gondoliers and a replica of the Rialto Bridge, the Venetian offers a 120,000-square-foot casino and a 4,000-suite hotel, as well as a shopping, dining, and entertainment complex. Las Vegas Sands also operates the Palazzo Casino next door to the Venetian, and the nearby Sands Expo Center trade show and convention center. In addition to its Vegas holdings, the firm has a handful of properties in China through its Sands China subsidiary.
Technically speaking, the shares of LVS have put on a spectacular show, soaring more than 89% since the beginning of the year. The equity has marched steadily higher along the support of its 10-week and 20-week moving averages since April 2009. The security has also skipped higher along its 10-month trend line since July 2009.
Despite the company’s stellar technical performance, investors remain extremely skeptical of the shares. The International Securities Exchange (ISE) and Chicago Board Options Exchange (CBOE) have reported a 10-day put/call volume ratio of 0.78 for the stock, which is higher than 98% of all those taken during the past year. In other words, puts have rarely been picked up at a faster pace than calls during the past 52 weeks.
In addition, the Schaeffer’s put/call open interest ratio (SOIR) for LVS comes in at 0.89. This ratio is higher than 82% of all those taken during the past year, indicating that short-term speculators have been more pessimistically aligned toward the shares only 18% of the time during the past 12 months.
Meanwhile, the bears are beginning to slowly unwind their short positions. During the past month, the number of LVS shares sold short dropped by 1% to 44 million. This accumulation of bearish bets accounts for more than 14% of the company’s total float. Should the stock continue to rally, it could squeeze the bears into unloading their pessimistic positions, creating a fresh wave of buying pressure for the security.