Legendary Vegas icon Steve Wynn, chairman and CEO of Wynn Resorts (Nasdaq: WYNN), had a must-watch interview with CNBC on May 28. Every investor can gain valuable insight from the specific thoughts behind many of his long-term and near-term strategic moves. Even if your Vegas investment portfolio is limited to nickel slots, the interview's a worthwhile look at the way Wynn thinks -- a process you should emulate when evaluating any business.

Wynn criticized the Obama administration, but not out of partisan political rage. After 40 years of investing in Vegas, Wynn has seen it all -- and he now believes that every business in America is frightened at what Washington will do next. His concerns have prompted Wynn to increase the amount of time he's spending with his assets in Macau where, he says, the government is far more stable and predictable.

The signal to Wynn investors: Expect Wynn to deploy more assets and capital to maximize Macau's contributions to revenue, while Vegas continues to struggle.

The interviewer asked about the new beach club Wynn opened in his Encore resort. Why do so, especially in a struggling economy? Isn't that like hitting on 19 in blackjack? According to Wynn, trends are changing; not content to sit and watch, people in the 22-40 age range want to be immersed in an experience. The design of the new Encore beach club reflects this shift.

According to Wynn, visitors in this demographic are more likely to have no mortgages, no kids -- and plenty of disposable income. The beach club's revamp also targets men aged 50-70, who Wynn believes will avoid growing old at any price. They want to be around this youthful energy, and they will pay for it. Wynn also said that he automatically revamps all his properties' rooms every five years, just to keep them current and fresh.

The takeaway from these observations: A recession doesn't change Wynn's need to react to changing trends. He's clearly hoping that this new addition will boost interest in the property, even during hard times.

Of course, you can't make any such changes without a solid capital structure. At Wynn's company, management is always prepared for a recession. Wynn reminded viewers that when his IPO failed to provide him with the $1 billion he wanted in equity, he and his partner put in the difference, so that the hotel would be less than 60% leveraged. Why? To be able make improvements Wynn knew would be inevitable, and to survive the equally inevitable bust cycle. That far-sighted strategy stands in sharp contrast to the overleveraging nightmare that now faces MGM Mirage (NYSE: MGM).

At present, Wynn said, Las Vegas is not a profitable city. It will be again, but not right now. Wynn argued that investors shouldn't listen to companies reporting EBITDA, because it distracts from the truth -- that everyone pays interest, taxes, and amortization. Those are real costs.

Look at Wynn's financials compared to competitors Las Vegas Sands (NYSE: LVS) and MGM Mirage.





2009 net income

$21 million

($540 million)

($1.3 billion)

MRQ net income

$27 million

($29 million)

($97 million)

2009 FCF

$53 million

($1.45 billion)

$451 million

Current long-term debt

$3.28 billion

$10.2 billion

$12.70 billion

Current cash

$1.76 billion

$4.05 billion

$0.44 billion

Net debt

$1.52 billion

$6.15 billion

$12.26 billion

2009 interest expense

$211 million

$322 million

$775 million

Source: Yahoo! Finance.

Anybody want to argue with me over capital structure? Anyone? Bueller?

All in all, the interview paints a portrait of Wynn as a man who knows what he's doing, and possibly knows his own business better than just about any other CEO. That makes sense, since Wynn and his wife own 20% of the company's stock, and other insiders hold 18% more. Analysts say the company will earn $1.10 this year and $1.70 next year -- an impressive feat, considering the much lower expectations for Las Vegas Sands and MGM.

I had a huge stack of chips in front of me, I couldn't imagine making a better bet than going all in on Steve Wynn. He's always been a winner, and as Fools know, you let your winners run.