Paging Mr. Kerkorian, Mr. Kirk Kerkorian
The question MGM Mirage investors are asking is, “When does Uncle Kirk comes to the rescue?”
The casino operator’s shares hovered around $54 on the New York Stock Exchange in April, a 12 percent drop from its average daily trading price in March and nearly 25 percent below what the stock was trading for a year ago. MGM Mirage’s stock price hit $100 in October, but it’s been in free fall since.
That’s where Kirk Kerkorian enters the picture. The 90-year-old Los Angeles-based billionaire controls 52 percent of the company. Previously, when MGM Mirage shares needed a lift, Kerkorian helped pump up the price.
Whether it’s a bid to increase his holdings or a move to take parts of the company private, as Kerkorian goes, so goes MGM Mirage. Last May, an announcement that he wanted to buy both Bellagio and the under-construction CityCenter development sent shares soaring 27 percent in one day.
“He is definitely the X-factor for the company,” Deutsche Bank gaming analyst Bill Lerner said. “Kerkorian transcends the company’s fundamentals. If it wasn’t for him being in the picture, I think the company is trading lower than it is now.”
Which is why Wall Street is watching. As MGM Mirage has tumbled in value, Kerkorian has been noticeably quiet.
“He’s been a backstop and he’s created value for (MGM Mirage) before,” Lerner said.
Another factor is Dubai World, which owns 9 percent of MGM Mirage. Some analysts are wondering whether the Persian Gulf state’s investment arm is suffering from buyer’s remorse.
Dubai World spent more than $2 billion for its stake in MGM Mirage, or $80 a share. As of Friday, that investment had lost 30 percent of its value. But Dubai World is in for the long haul. It spent $2.7 billion to acquire half of CityCenter.
MGM Mirage announces first-quarter earnings Tuesday. The investment community will be watching.
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Colorado voters may get a chance to expand gaming in the state without adding new casinos. A ballot measure has been proposed that would increase wagering limits from $5 to $100, allow casinos to offer craps and roulette, and keep gambling halls open 24 hours.
The referendum needs 76,000 signatures to qualify for the November ballot. Colorado casinos, including properties operated by Riviera Holdings Corp. and Ameristar Casinos, have been hurt by a ban on smoking. Gaming revenue statewide was down through March.
Howard Stutz’s Inside Gaming column appears Sundays. E-mail him at hstutz@reviewjournal.com or call 702-477-3871.