Investor ups stake in MGM Resorts

Hedge fund billionaire John Paulson has increased his stake in MGM Resorts International, but he still falls below the minimum requirement necessary for Nevada gaming licensing.

Paulson, who now controls the second-largest amount of stock in the Strip casino giant, also bought into another company with Las Vegas ties, acquiring a small percentage of real estate developer General Growth Properties, which owns several area shopping malls.

In a quarterly filing with the Securities and Exchange Commission, New York City-based Paulson & Co. said it raised its ownership in MGM Resorts to 9.5 percent, adding 3.8 million shares and giving the firm 43.8 million shares in the company.

Paulson’s stake is second only to company founder Kirk Kerkorian, a 93-year-old Los Angeles billionaire who controls 37 percent of MGM Resorts through his privately held Tracinda Corp.

Paulson also owns about 4.6 percent of Boyd Gaming Corp. and acquired a 9.9 percent stake in Harrah’s Entertainment.

Last week, Harrah’s filed a prospectus with the SEC to list Paulson’s shares on the open market. Paulson acquired his interest in Harrah’s in exchange for $710 million in debt.

According to his SEC filing late Monday, Paulson’s hedge fund owns stock in 76 public companies with a total value of $22.7 billion.

Paulson has not commented on his gaming industry purchases, which originally were made in May and June. A financial website, gurufocus.com, estimated his purchase price of MGM Resorts ranged between $10.05 and $16.64 per share with an average price of $13.33.

At the time, Paulson told investors he was bullish on the recovery of the American economy. In 2007, his hedge fund made $15 billion betting on the decline in subprime mortgages.

The hedge fund, which is a loosely regulated private partnership that can bet on rising or falling prices or any securities, is valued at more than $35 million.

An MGM Resorts spokesman declined comment on Paulson’s recent investment.

MGM Resorts Chairman and Chief Executive Officer Jim Murren, who knew Paulson from when they were both analysts on Wall Street, said previously he had spoken with the hedge fund manager about the investment.

“He is betting on a recovery of Las Vegas, and we are the most leveraged bet,” Murren said.

One analyst, who asked not to be named, said Paulson’s stake in General Growth shows that he believes other aspects of the Las Vegas market also will recover.

Chicago-based General Growth, which filed for Chapter 11 bankruptcy in April 2009, has more the 200 properties in 44 states, including the Grand Canal Shoppes at The Venetian, the Shoppes at Palazzo and the Fashion Show, Boulevard and Meadows malls. The company halted construction of Summerlin Centre next to Red Rock Resort after filing bankruptcy.

General Growth has filed an amended plan of reorganization and expects to emerge from bankruptcy in October.

Paulson acquired more than 6.56 million shares of General Growth according to his SEC filing with an average price per share of $14.74.

In his filing, Paulson also disclosed increased stakes in insurer Hartford Financial, and new investments in oil giant Exxon Mobil and Goldman Sachs.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.

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