What do this billionaire's actions mean?
May 18th, 2010 at 12:38:48 PM
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Casino stocks get boost with MGM Mirage, Boyd investment news
May. 18, 2010
Copyright © Las Vegas Review-Journal
By HOWARD STUTZ
LAS VEGAS REVIEW-JOURNAL
A multimillion-dollar investment by a New York billionaire, who became the second-largest investor in casino giant MGM Mirage, gave a lift Tuesday morning to much of the gaming sector on Wall Street.
Casino stocks traded higher Tuesday, the day after Paulson & Co., a hedge fund controlled by John Paulson, disclosed it had bought large stakes of MGM Mirage and Boyd Gaming Corp. Shares of Boyd Gaming, traded on the New York Stock Exchange, were up more than 11 percent Tuesday. MGM Mirage was up almost 2 percent.
Paulson, through a filing with the Securities and Exchange Commission on Monday, said it bought 40 million shares of MGM Mirage and 4 million shares of Boyd Gaming. The purchases gave Paulson 9.06 percent of MGM Mirage, the second-largest stake in the company behind billionaire Kirk Kerkorian, MGM Mirage's founder, who controls 37 percent of the outstanding shares through his privately held Tracinda Corp.
Paulson's acquisition in Boyd Gaming gave the hedge fund 4.6 percent of the company's outstanding shares, the fourth largest ownership stake. Shares of casino operator's Wynn Resorts Ltd. and Las Vegas Sands Corp. were up more than 3 percent each Tuesday on news of the investment.
Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.
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This purchase price was made on 31 March. John Paulson is required to notify the SEC 45 days after the purchase (which would have been Saturday, so he probably had to do it by Monday). When news broke yesterday it made the price jump.
However, the MGM price peaked three weeks ago. Had Paulson sold his MGM shares on the peak day (26 April) he would have made $185.6 million in only 26 days. How do we know he hasn't already dumped his shares?
It's a lot of shares, but it may not mean anything strategically.
The Boyd purchase of 4 million shares for less than $40 million was made on the same day. However, in comparison the the $480m MGM share purchase it is a relatively small amount of money. It could be just to throw people off the scent.
May. 18, 2010
Copyright © Las Vegas Review-Journal
By HOWARD STUTZ
LAS VEGAS REVIEW-JOURNAL
A multimillion-dollar investment by a New York billionaire, who became the second-largest investor in casino giant MGM Mirage, gave a lift Tuesday morning to much of the gaming sector on Wall Street.
Casino stocks traded higher Tuesday, the day after Paulson & Co., a hedge fund controlled by John Paulson, disclosed it had bought large stakes of MGM Mirage and Boyd Gaming Corp. Shares of Boyd Gaming, traded on the New York Stock Exchange, were up more than 11 percent Tuesday. MGM Mirage was up almost 2 percent.
Paulson, through a filing with the Securities and Exchange Commission on Monday, said it bought 40 million shares of MGM Mirage and 4 million shares of Boyd Gaming. The purchases gave Paulson 9.06 percent of MGM Mirage, the second-largest stake in the company behind billionaire Kirk Kerkorian, MGM Mirage's founder, who controls 37 percent of the outstanding shares through his privately held Tracinda Corp.
Paulson's acquisition in Boyd Gaming gave the hedge fund 4.6 percent of the company's outstanding shares, the fourth largest ownership stake. Shares of casino operator's Wynn Resorts Ltd. and Las Vegas Sands Corp. were up more than 3 percent each Tuesday on news of the investment.
Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.
================================
This purchase price was made on 31 March. John Paulson is required to notify the SEC 45 days after the purchase (which would have been Saturday, so he probably had to do it by Monday). When news broke yesterday it made the price jump.
However, the MGM price peaked three weeks ago. Had Paulson sold his MGM shares on the peak day (26 April) he would have made $185.6 million in only 26 days. How do we know he hasn't already dumped his shares?
It's a lot of shares, but it may not mean anything strategically.
The Boyd purchase of 4 million shares for less than $40 million was made on the same day. However, in comparison the the $480m MGM share purchase it is a relatively small amount of money. It could be just to throw people off the scent.
May 18th, 2010 at 1:26:27 PM
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It might be difficult for the market to absorb such massive selling. However, he is not legally considered an insider and so could make a short term profit.Quote: pacomartinHow do we know he hasn't already dumped his shares?
May 18th, 2010 at 4:32:26 PM
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REWRITTEN ARTICLE
May. 18, 2010
Casino stocks get boost with MGM Mirage, Boyd investment news
By HOWARD STUTZ
LAS VEGAS REVIEW-JOURNAL
The long-term intentions of New York billionaire John Paulson, whose hedge fund is now the second-largest investor in casino giant MGM Mirage, were unclear Tuesday, although the news helped lift the share prices of much of the gaming sector.
Paulson & Co. disclosed its purchase of 40 million shares of MGM Mirage and 4 million shares of Boyd Gaming Corp., in a filing with the Securities and Exchange Commission late Monday. The gaming investments were lumped among the stock purchases of 60 companies by the hedge fund. The purchases totaled $21.15 billion.
The casino company acquisitions were made in the first quarter, which ended March 31. The MGM Mirage purchase gave Paulson 9.06 percent of the casino operator's 441.27 million outstanding shares.
According to the SEC filing, Paulson paid $12 a share, or $480 million.
Los Angeles billionaire Kirk Kerkorian, MGM Mirage's founder, is the company's largest shareholder, controlling 37 percent of the company through Tracinda Corp., the 92-year-old financier's privately held investment arm.
Armel Leslie, a spokesman for Paulson who founded his hedge fund in 1994, said there wouldn't be any comment beyond the SEC filing, which disclosed investments in banks, home builders, hotel companies and pharmaceutical companies.
However, in a conference call with investors and analysts earlier this month, Paulson said he was bullish on the U.S. economy.
He thought the American housing markets would have a "V-shaped recovery" throughout the year. Paulson speculated that housing prices could climb 3 percent to 5 percent this year and 8 percent to 12 percent in 2011.
"We're looking for a very strong period of corporate earnings growth," he said on the conference call.
Paulson's hedge fund made $15 billion betting on the decline in subprime mortgages in 2007. Paulson oversees $35 billion in hedge funds, which are loosely regulated private partnerships that can bet on rising or falling prices of any securities.
"Most of the gains from distressed investing have been realized," Paulson said on his conference call. "Once a bond goes to par, all the incremental increase in the value of the enterprise will flow through the equity. That's where we're positioned."
Analysts speculated that Paulson's investment in MGM Mirage and Boyd could be a signal that he believes a recovery in the housing market will be a boost to the gaming industry, which saw revenues decline 5.5 percent nationwide in 2009.
On Tuesday, shares of MGM Mirage and Boyd Gaming initially rose on the New York Stock Exchange following news of Paulson's investment.
Boyd Gaming closed at 13.78, up 54 cents or 4.08 percent, after initially climbing more than 11 percent in value. MGM Mirage, which had been up as much as 2 percent, closed at $12.98, down 34 cents or 2.55 percent.
Paulson's acquisition in Boyd Gaming gave the hedge fund 4.6 percent of the company's outstanding shares, the fourth-largest ownership stake. Paulson paid $9.88 a share, or $39.52 million.
Boyd Gaming operates casinos in Nevada and several Midwest regional markets. MGM Mirage has 10 resorts on the Strip and casinos in Northern Nevada; Detroit; Biloxi, Miss.; and Macau The companies have 50-50 ownership in the Borgata in Atlantic City, but MGM Mirage has put its share of the resort up for sale.
Independent gaming analyst Frank Martin speculated that Paulson, who was required to report the acquisition, already could have flipped the shares in MGM Mirage. The company hit a high of $16.64 on April 26.
Neither investment would demand Paulson to seek licensing approval from Nevada gaming regulators. State gaming law requires passive investors to file an application if their investment exceeds 10 percent.
Leslie said he didn't know if Paulson had spoken with Kerkorian, whose stake in MGM Mirage shrunk last year when the company restructured a portion of its $13 billion in long-term debt by issuing additional shares on both the open market and through a private placement.
The investment in MGM Mirage by Dubai World, the business arm of the Persian Gulf emirate, shrunk to 5.9 percent and the entity is MGM Mirage's fourth-largest shareholder. Dubai World also owns 50 percent of CityCenter, the $8.5 billion Strip development in which MGM Mirage owns the remaining 50 percent.
Spokesmen for MGM Mirage and Boyd Gaming separately declined comment on the Paulson investment.
Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.
=============================
That was not very satisfying blurb so I'll expand on it here.
First that was only part of what I said. I pointed out that the acquisitions were made exactly on the date 31 March. Howard simply changed a line in the news article to The casino company acquisitions were made in the first quarter, which ended March 31.
My speculation was that Paulson knew that there was going to be surge in reported gaming revenue for February when they were going to be reported a week later (8 April). That doesn't have to be insider information. Baccarat had been unusually strong in December, and there were high hopes for a strong February for Chinese New Years. Of course it would have helped if instead of speculating he knew that the jump was going to be over 32%, the strongest increase for 11 years.
What would have been almost impossible to figure out without insider information was how horrendous the non-gaming revenue was for the quarter. He had a short window, he purchase the half billion in shares on exactly 31 March, the gaming revenue for February was reported on 8 April, and the preliminary first quarter MGM release was made on 14 April (showing that every MGM casino on the strip had gone down for the quarter despite the amazing February).
If it was insider information, the MGM corporation probably benefited as well. On 15 April MGM announced that it had priced $1.0 billion in aggregate principal amount of its 4.25% convertible senior notes due 2015. The transaction closed on April 20, 2010, and was subject to satisfaction of various customary closing conditions. It must have helped to have such a half billion dollar investment on their books just as they were doing the pricing.
May. 18, 2010
Casino stocks get boost with MGM Mirage, Boyd investment news
By HOWARD STUTZ
LAS VEGAS REVIEW-JOURNAL
The long-term intentions of New York billionaire John Paulson, whose hedge fund is now the second-largest investor in casino giant MGM Mirage, were unclear Tuesday, although the news helped lift the share prices of much of the gaming sector.
Paulson & Co. disclosed its purchase of 40 million shares of MGM Mirage and 4 million shares of Boyd Gaming Corp., in a filing with the Securities and Exchange Commission late Monday. The gaming investments were lumped among the stock purchases of 60 companies by the hedge fund. The purchases totaled $21.15 billion.
The casino company acquisitions were made in the first quarter, which ended March 31. The MGM Mirage purchase gave Paulson 9.06 percent of the casino operator's 441.27 million outstanding shares.
According to the SEC filing, Paulson paid $12 a share, or $480 million.
Los Angeles billionaire Kirk Kerkorian, MGM Mirage's founder, is the company's largest shareholder, controlling 37 percent of the company through Tracinda Corp., the 92-year-old financier's privately held investment arm.
Armel Leslie, a spokesman for Paulson who founded his hedge fund in 1994, said there wouldn't be any comment beyond the SEC filing, which disclosed investments in banks, home builders, hotel companies and pharmaceutical companies.
However, in a conference call with investors and analysts earlier this month, Paulson said he was bullish on the U.S. economy.
He thought the American housing markets would have a "V-shaped recovery" throughout the year. Paulson speculated that housing prices could climb 3 percent to 5 percent this year and 8 percent to 12 percent in 2011.
"We're looking for a very strong period of corporate earnings growth," he said on the conference call.
Paulson's hedge fund made $15 billion betting on the decline in subprime mortgages in 2007. Paulson oversees $35 billion in hedge funds, which are loosely regulated private partnerships that can bet on rising or falling prices of any securities.
"Most of the gains from distressed investing have been realized," Paulson said on his conference call. "Once a bond goes to par, all the incremental increase in the value of the enterprise will flow through the equity. That's where we're positioned."
Analysts speculated that Paulson's investment in MGM Mirage and Boyd could be a signal that he believes a recovery in the housing market will be a boost to the gaming industry, which saw revenues decline 5.5 percent nationwide in 2009.
On Tuesday, shares of MGM Mirage and Boyd Gaming initially rose on the New York Stock Exchange following news of Paulson's investment.
Boyd Gaming closed at 13.78, up 54 cents or 4.08 percent, after initially climbing more than 11 percent in value. MGM Mirage, which had been up as much as 2 percent, closed at $12.98, down 34 cents or 2.55 percent.
Paulson's acquisition in Boyd Gaming gave the hedge fund 4.6 percent of the company's outstanding shares, the fourth-largest ownership stake. Paulson paid $9.88 a share, or $39.52 million.
Boyd Gaming operates casinos in Nevada and several Midwest regional markets. MGM Mirage has 10 resorts on the Strip and casinos in Northern Nevada; Detroit; Biloxi, Miss.; and Macau The companies have 50-50 ownership in the Borgata in Atlantic City, but MGM Mirage has put its share of the resort up for sale.
Independent gaming analyst Frank Martin speculated that Paulson, who was required to report the acquisition, already could have flipped the shares in MGM Mirage. The company hit a high of $16.64 on April 26.
Neither investment would demand Paulson to seek licensing approval from Nevada gaming regulators. State gaming law requires passive investors to file an application if their investment exceeds 10 percent.
Leslie said he didn't know if Paulson had spoken with Kerkorian, whose stake in MGM Mirage shrunk last year when the company restructured a portion of its $13 billion in long-term debt by issuing additional shares on both the open market and through a private placement.
The investment in MGM Mirage by Dubai World, the business arm of the Persian Gulf emirate, shrunk to 5.9 percent and the entity is MGM Mirage's fourth-largest shareholder. Dubai World also owns 50 percent of CityCenter, the $8.5 billion Strip development in which MGM Mirage owns the remaining 50 percent.
Spokesmen for MGM Mirage and Boyd Gaming separately declined comment on the Paulson investment.
Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.
=============================
That was not very satisfying blurb so I'll expand on it here.
First that was only part of what I said. I pointed out that the acquisitions were made exactly on the date 31 March. Howard simply changed a line in the news article to The casino company acquisitions were made in the first quarter, which ended March 31.
My speculation was that Paulson knew that there was going to be surge in reported gaming revenue for February when they were going to be reported a week later (8 April). That doesn't have to be insider information. Baccarat had been unusually strong in December, and there were high hopes for a strong February for Chinese New Years. Of course it would have helped if instead of speculating he knew that the jump was going to be over 32%, the strongest increase for 11 years.
What would have been almost impossible to figure out without insider information was how horrendous the non-gaming revenue was for the quarter. He had a short window, he purchase the half billion in shares on exactly 31 March, the gaming revenue for February was reported on 8 April, and the preliminary first quarter MGM release was made on 14 April (showing that every MGM casino on the strip had gone down for the quarter despite the amazing February).
If it was insider information, the MGM corporation probably benefited as well. On 15 April MGM announced that it had priced $1.0 billion in aggregate principal amount of its 4.25% convertible senior notes due 2015. The transaction closed on April 20, 2010, and was subject to satisfaction of various customary closing conditions. It must have helped to have such a half billion dollar investment on their books just as they were doing the pricing.
