MGM shares dive more steeply than rest of sector

Shares of casino giant MGM Resorts International took a steeper dive than the rest of the gaming sector Thursday, a reaction in part to billionaire financier Kirk Kerkorian selling a portion of his stake in the company.

Kerkorian's private investment arm confirmed the sale of some 20 million shares of MGM Resorts late Wednesday in a filing with the U.S. Securities and Exchange Commission.

Los Angeles-based Tracinda Corp. said it sold the stock for $10.74 a share, netting more than $214.8 million. The sale left Tracinda with more than 111.17 million shares of MGM Resorts, or 22.8 percent of the casino conglomerate.

Kerkorian, through Tracinda, remains the company's largest shareholder.

MGM Resorts closed down $1.54 or 13.34 percent Thursday. The rocky ride left the company's share price at $10 on the New York Stock Exchange.

Nomura Securities gaming analyst Harry Curtis told investors he was maintaining a "buy" rating on stock in MGM Resorts.

"We believe the timing is curious given (the company's) improving results in Las Vegas and Macau," Curtis said.

The transaction by the 94-year-old founder of the company that now operates 10 Strip resorts, including the MGM Grand, Bellagio and CityCenter, did not send up any red flags within the boardroom.

Through Tracinda, Kerkorian said earlier this year he was "evaluating" his investment in MGM Resorts. He recently retired from the company's board of directors.

In an email statement, MGM Resorts Chairman and Chief Executive Officer Jim Murren, who is in Macau, said Kerkorian still plays a key role in the company. Kerkorian recently invested $50 million in MGM China, the company's subsidiary that became publicly traded on the Hong Kong Stock Exchange in June.

"I have not met a more generous man in my professional life, and at every turn he has been a supporter of MGM," Murren said of Kerkorian. "After all he has given us over the years, there is no one I can think of who is more deserving to have the flexibility in his investments so as to enjoy his life."

In the SEC filing, Tracinda -- which is named for Kerkorian's two daughters, Tracy and Linda -- had agreed to a lock-up agreement and not sell any additional MGM Resorts shares for 60 days.

The firm says in the filing that it "continues to believe that there is substantial value in the assets of MGM Resorts and that the company is a good long-term investment."

However, the Tracinda said it would continue to explore transactions involving its MGM Resorts holdings.

Kerkorian's stake in MGM Resorts has diminished over the past seven years. He was the company's majority owner with a more than 50 percent stake as recently as 2009.

Over the years, Kerkorian had made announcements about his MGM Resorts holdings that many analysts have viewed as ways to try to drive up the price the stock.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Follow @howardstutz on Twitter.