Casino operator Wynn Resorts (WYNN), Hit a 52 week high recently, and the shares have been climbing prior to the company’s announcement that it was going to pay a "special" cash dividend to shareholders of record on November 23rd.
I want you to take a look at the insider activity of one of the company’s insiders in the weeks leading into Wynn’s announcement.
In the month of August, long time Las Vegas casino operator, and Chairman of Wynn International, Jack B. Binion, purchased 911,956 shares at prices ranging from $68.90-$74.00. After the announcement of the “special” dividend, yesterday (11-16-06) the stock traded as high as $96.50.
Now you know why they called this dividend "special".
Since short term capital gains are taxed at ordinary income, the dividend of $5,578,536 that Binion will receive will be taxed at a rate of 15%, rather than the 35% rate for capital gains in the higher tax bracket.
On the $5,578,536 gain from the special dividend, Binion will pay a tax of about 15% or $836,780. If no dividend had been declared and Binion took a short term capital gain instead, the $5.5 million dollar gain would have been taxed at 35%, or $1,952,487. The difference between the two allows Binion to keep $1,115,707 more.
Did Binion know something? I’ll leave that up to you to decide. Maybe he was just lucky.
