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MGM And The Company Town

By Chuckmonster on Tuesday, 18th June 2013 3:10pm
  » filed under Las Vegas  comments: 11

   

The Review Journal Inside Gaming blog trumpeted this headline yesterday:

Confidence in MGM Resorts future climbing

Go read the article.

Evidence cited is: J.P. Morgan investment analyst said meetings with MGM were 'upbeat', the news that MGM 'might' sell Crystals, Dubai 'might' sell their stake in CityCenter, MGM 'might' refinance the CityCenter debt, that Aria has 'gotten some love', Wall Street 'likes' the Cotai renderings and MGM is spending a bunch of money renovating rooms and building The Park and The Arena.

This is all part of the script MGM is pushing in the hopes of breaking the shackles that are tying them to the bottom of the gigantic hole they dug for themselves. Their recent investor presentation materials are stuffed to the gills with the message that we are now in "A New Era" for MGM.

Unfortunately, there's actual evidence.

The red line is the S&P 500, a bell weather aggregate for tracking the relative health of the stock market. The blue line is MGM's stock price. The sample size is 5 years, starting at almost the exact moment the housing market began to implode and until today.

Since this day in 2008, MGM has shed 64% of its value. Comparatively, S&P 500 has gained gained back its steep losses and added another 20%. While the rest of the stock market posts record highs and impressive gains... MGM is treading water in 2010. One might be able to construe, with just a little bit of inference that Wall Street has not displayed bullish behavior on MGM stock since Terry Lanni left.

In the week since the "A New Era" campaign began with the investor conference and the release of the Cotai property details, investors have certainly not been brimming with excitement. The stock has gained less than a quarter in the last five days of trading.

Looks like all those business dealings with Sam Nazarian are having an affect on MGM's top brass while the company town blows the ash and calls it a pyre.








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Comments & Discussion:

That took some research...thanks Chuck!

For what it's worth, it's all about your point of entry.

Looking at a 1yr chart, MGM up 40% vs S&P up only 20% http://goo.gl/dGoRo

Looking at a 2yr chart, both up 30% http://goo.gl/C6dtH

Looking at a 3yr chart, S&P blows MGM away up nearly 50% vs MGM up ___
http://goo.gl/Bo2QU

But then a 4yr chart it's the opposite, MGM outpacing S&P by a longshot - up 140% vs index up only 80% http://goo.gl/39YRW

And then we are at your 5 year comparison.

So really, it's a crapshoot. One year MGM is better than the index, the next it isn't. It is a great name to trade 20% again and again with its wide swings though.

If you really want a sure thing, as I lament to my vegas neighbour the best time to buy MGM is right before I go down to Vegas as inevitably their next quarterly result is stellar!

Also anecdotally, rooms and restaurants and tables are all packed every trip I'm there (with higher room rates, more expensive dining and jacked table minimums each time!!!)

whoops getting slack - for 3yr, S&P up 50% MGM up 25%.

Also those were supposed to be live links but got stripped. Oh well.

Anyone interested can play around on any financial site, for example here's one with MGM and S&P pre-loaded against each other:

http://bigcharts.marketwatch.com/advchart/frames/frames.asp?show=&insttype=Stock&symb=mgm&time=8&startdate=1%2F4%2F1999&enddate=6%2F18%2F2013&freq=1&compidx=SP500&comptemptext=&comp=none&ma=0&maval=9&uf=0&lf=1&lf2=0&lf3=0&type=2&style=320&size=2&x=31&y=17&timeFrameToggle=false&compareToToggle=false&indicatorsToggle=false&chartStyleToggle=false&state=12

MGM screwed the pooch when they went ahead with completing CityCenter. The Billion$ in debt and the additional 6000 rooms couldn't come at a worse time given the recession. BYD was smart enuff to stop their Echelon construction to avoid bankruptcy. Luckily for MGM, Ruffin bought TI and their half ownership of the MGM China helped them pay the bills for the last few years.

@jimmy i looked at all the distances. the start of the housing crisis seemed like the best demarcation.... a mean watermark. i'm sure you may find periods that mgm's stock growth has out paced the universe, but the fact remains that compared to S&P and other operators shareholders aren't interested in betting on MGM.

The Review Journal article is a puff piece, with the narrative probably pitched by the company themselves. I like Howard Stutz as a guy, but his articles always tow the line of the release or pitch submitted. I know this because I get the same press releases in my inbox as well. He never questions and never challenges.

It's tough to pinpoint. That is a mean watermark for sure.

For kicks for those that aren't as web finance savvy, here is a link a chart with MGM, Wynn, Boyd, LVS, and Caesars (though only public for the recent time period). I have set it to default to a 5 year timeframe but can easily click any other time frame. Interesting stuff, MGM clearly the laggard on the 5 year stretch down over 60%. Wynn the only winner versus the index on this timeframe. On a 1-year basis Wynn and MGM both tracking close near up 40% (Boyd the shining star on this one - sayonara Echelon!) Do a 3 year and it's Las Vegas Sands that is the winner by a wide margin. Fun stuff.

https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1371679397166&chddm=486404&chls=IntervalBasedLine&cmpto=INDEXSP:.INX;NYSE:LVS;NASDAQ:WYNN;NYSE:BYD;NASDAQ:CZR&cmptdms=0;0;0;0;0&q=NYSE:MGM&&fct=big&ei=2CrCUeC2Dc6xqAHobA

can't get the embedded html href links to work for the life of me (and Iexplorer isn't text wrapping the long links) - is that presently disabled on the site or am I just messing up my code?

on another MGM note, saw this article today. Interesting - MGM to compete with the NYNY/MC park for who looks most interesting from the street to compel visitors to wander inside. Not that there is much to open up on that end of the casino anyhow (bye bye poker room ambiance I guess, maybe it will permanently settle in the temporary Hakkasan reno location)

Is it too much to ask for a a mock up of how a Strip-wall-less MGM might look? :)

www.lasvegassun.com/news/2013/jun/18/strip-scribbles-mgm-open-its-walls-strip-so-touris/

@jb we don't allow html in the comments. it is a bit of a pain, but it thwarts spammers. i'm currently working on version 7.0 of VegasTripping which hopefully will have richer commenting experience and more spam blocking on the front end of registration.

gotcha, is that just for comments on stories? I see when I go to the Board there is a message saying 'html links are okay' with a little pop-down that shows how to code it, I figured it was for the articles too.

yeah, not here, yet. all the good stuff will come in due time... i'm a one man design/code/database/serveradmin wrecking crew. takes a while but will hopefully be worth it.

Chuck, we certainly do appreciate all the hard work.

At one point I was going to remark about all the ads that have been showing up but upon reconsideration, More power to ya, man....



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