{"id":86162,"date":"2017-10-11T17:33:25","date_gmt":"2017-10-11T21:33:25","guid":{"rendered":"https:\/\/stateofthenation2012.com\/?p=86162"},"modified":"2017-10-11T17:33:25","modified_gmt":"2017-10-11T21:33:25","slug":"what-was-going-on-with-mgm-resorts-in-september","status":"publish","type":"post","link":"https:\/\/stateofthenation2012.com\/?p=86162","title":{"rendered":"What Was Going On With MGM Resorts In September?"},"content":{"rendered":"

\"\"<\/a><\/p>\n

William Craddick
\nDisobedient Media<\/p>\n

On Tuesday, September 5th, 2017, \u00a0the board of MGM Resorts International decided to approve a $1 billion\u00a0share repurchase program<\/a>. At $17.7 billion today, the program represented a significant portion of its current market cap. By the end of the week, MGM\u2019s CEO, James Murren, had coolly divested himself of 80% of the shares he owned in his company. The divestment came just days before the ex-dividend date on September 8th, 2017.<\/p>\n

The sales were originally disclosed in a document filed with the\u00a0Securities and Exchange Commission<\/a>\u00a0(SEC). Murren had previously divested 57,269 shares on July 31st and August 9th, 2017.<\/p>\n

It\u2019s currently unclear why Murren chose to sell when he did. To date, MGM\u2019s stock has not experienced a significant decline in value due to the repurchasing program. It could be interpreted to run against the company\u2019s interests for the CEO to convey a sense of urgency in the selling of his shares by disposing of them immediately after the commencement of his company\u2019s share repurchase program. It\u2019s also strange that the CEO of a company would sell more than half of their stake (let alone 80%) in the company that they represented.<\/p>\n

Mr. Murren and his fellow board members were not the only speculators who were bearish on MGM\u2019s prospects. Billionaire investor George Soros also bought $42 million worth of puts on the company, according to\u00a0SEC filings<\/a>\u00a0from mid August.<\/p>\n

That point being made, it needs to be asked why any profit-oriented CEO of any company would sell 80% of his personal stake in his own corporation, especially after he thought it was in the business\u2019 best interest to initiate a massive share repurchase program which one would theoretically assume to reduce the number of shares in the company and increase the price of each share, ceteris peribus.<\/p>\n

Why would the individual with the most information about the company sell 80% of his shares immediately after the commencement of a program that most would consider positive for the stock? Shouldn\u2019t he want to hold on to his shares? Is there something he knew, that others didn\u2019t, that lead to so much movement in such little time? What a week!<\/p>\n

On September 5th, 2017, 18 analysts were bullish on MGM, 1 had a hold rating, and 1 had a sell rating. Taking the events of September and October into consideration, has MGM\u2019s picture heading forward improved, or worsened?<\/p>\n

___
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