IAC Gains Control of 20% of MGM Resorts International Stock
IAC/InterActiveCorp Owns 20% of MGM Resorts International's Shares
Barry Diller's IAC/InterActiveCorp (NASDAQ: IAC) has become the largest shareholder of MGM Resorts International (NYSE: MGM), with a 20% stake in the casino giant. In his recent letter to investors, IAC CEO Joey Levin revealed this news.
According to Levin, while MGM has sound fundamentals, its stock performance doesn't reflect its strength. He highlighted that despite IAC's substantial investment, the share price hasn't shown significant growth, with a 7.6% decline over the past year and a 10.2% drop this year.
In the letter, Levin said, "Our biggest investment, MGM, did similarly well with a similar failure to move its share price." But he still expressed satisfaction with the company's records in the first quarter.
According to a report in Barron's, IAC has unrealized gains of around $163 million on its MGM stake.
How IAC Grew Its MGM Stake
IAC started buying MGM shares in 2020, spending $1 billion in August and an additional $1 billion by the end of the year. In February 2022, IAC teamed up with MGM to purchase $405 million worth of shares that were being offloaded by Corvex Management. Since acquiring its stake, IAC hasn't reduced it.
MGM's aggressive share buyback program has also contributed to IAC's growing stake in the company. From January to March, the provider of casino services bought back 12 million shares, reducing the total shares outstanding by 36% since 2021.
IAC's Unusual Involvement with MGM
When IAC first invested in MGM nearly four years ago, it marked a change in the firm's usual approach to not holding passive positions in companies. Previously, they would typically sell stocks after making a profit, leading to their involvement in MGM being unusual.
Despite their significant stake, IAC is yet to make any noise about their presence at MGM. As the largest shareholder, they currently hold 10 times more MGM equity than Corvex and more than the combined shares owned by Vanguard, BlackRock, and State Street Global Advisors.
In the past, IAC has been known for its shorter-term investments. But they believed that MGM's strong balance sheet, impressive Las Vegas portfolio, and exposure to online gaming made the gaming company a long-term investment.
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Source: www.casino.org
