- IAC already owns about 22% of the casino giant
- Diller says MGM shares are deeply undervalued
IAC/InterActiveCorp (NASDAQ: IAC) could consider boosting its already sizable stake in MGM Resorts International (NYSE: MGM), according to Chairman Barry Diller.
Diller, who’s returning as chief executive officer of the conglomerate, made comments to that effect on the company’s fourth-quarter earnings conference call on Wednesday. He and now former IAC CEO Joey Levin are members of MGM’s board of directors.
In his final letter to IAC shareholders as chief executive officer, Levin mentioned MGM just once, noting the largest operator on the Las Vegas Strip continues “to post records.” There’s truth in that assessment as MGM shares are up 10.13% in after-hours trading after the gaming company beat Wall Street’s earnings per share and sales estimates for the final three months of 2024.
That surge was buoyed by confirmation that BetMGM will be profitable this year and comments from management indicating demand at its Las Vegas and regional casino hotels has been solid to start 2025.
Diller Bullish on MGM
In August 2020, IAC bought $1 billion worth of MGM shares and added another $1 billion over the subsequent three months. Today, Diller’s company is the largest MGM shareholder, controlling about 22% of the gaming company’s outstanding equity.
IAC’s percentage of MGM stock and status as the largest investor has been aided by the operator’s penchant for buying back its stock, which reduces the shares outstanding count. That trend continued in the fourth quarter as the Bellagio operator repurchased three million shares, bringing its 2024 buyback activity to $1.3 billion.
While Levin barely mentioned MGM in his shareholder letter, Diller was more effusive in his praise of the casino company. On a call with analysts, the media mogul compared MGM stock to a Patek Philippe watch. In calling it “a forever asset,” Diller added it’s possible IAC could add its MGM stake.
He views the shares as inexpensive, calling MGM stock “wildly undervalued.” Before the aforementioned after-hours pop, the shares were up 6.81% over the past month, but were laggards last year.
Diller Looking to Invest, but Isn’t Anxious
IAC has been attached to some recent nongaming mergers and acquisition rumors, but Diller said on the conference call that the company is “not anxious to invest but is looking for good ideas.”
What constitutes a good investment idea is a matter of Diller’s discretion, but four years ago, IAC was willing to finance a portion of MGM’s bid for Entain Plc (OTC: GMVHY), which owns the other half of BetMGM.
Speculation is again swirling that MGM could make a move on its partner, but neither company has publicly commented to that effect, nor did Diller mention that possibility on the IAC call.
The post IAC Could Boost MGM Stake, Says Diller appeared first on Casino.org.
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