A large detractor from the Fund’s performance for both the quarter and one-year periods was Wynn Macau (HKSE:01128, Financial), which owns and operates two luxury hotel and casino resorts in the Macau region of China. Wynn Macau’s shares underperformed for two reasons. First, sporadic increases in Covid-19 cases in both China and Macau led the Macau government to impose strict travel requirements in the area, which deterred visitors and depressed revenue. Second, the Macau government began the concession renewal process for gaming licenses, which are set to expire in June 2022. The initial public consultation document indicated that the government may increase regulation on casino operators. Although the new concession terms have not been finalized, investors are worried that new regulations could hinder casino operators. We believe it is too early to draw any meaningful conclusions, and Wynn Macau’s current share price already assumes a significant hit to the company’s long-term value. We continue to monitor the situation carefully and should have greater clarity in the coming quarters.
From David Herro (Trades, Portfolio)'s Oakmark Intl Small Cap (Trades, Portfolio) Fund third-quarter 2021 commentary.
