The experience Casino operator MGM Resorts International (MGM, Financial) had in the recent years best represents the boom and bust cycle of real estate bubble. At peak of the boom, the company started the CityCenter project -- a massive build-out that cost about $10 billion in the center of the Las Vegas Strip. When the downturn came, revenue dwindled and the company went through some near-death experience last year, only saved from declaring bankruptcy after a number of debt and equity maneuvers last year.
John Paulson, the star investor during the financial crisis, surprised his followers recently by taking a 180-degree turn in his view towards the US real estate market. In a recent speech, he advised people buy a house for themselves and lend money to relatives and have them buy a house.
One of the investments along that thesis Paulson made is buying into MGM Resorts. GuruFocus data shows that he owns 43,800,000 shares as of 06/30/2010, which accounts for 1.86% of the $22.7 billion portfolio of Paulson & Co.. Here is data we have:
This morning, Jim Murren, chief executive officer of MGM Resorts International, spoke with Deirdre Bolton on Bloomberg Television's "InsideTrack." He talked about the outlook for refinancing the CityCenter development's $1.8 billion loan, MGM's liquidity position and the outlook for the casino industry in Las Vegas. He presented a quite bullish view of his company.
In the last one minute of the interview, Murren talked about why John Paulson invested into MGM. In Paulson’s view, US will have inflation. He does not know when inflation will hit us, but it will come. When inflation comes, hotel companies like MGM can raise prices instantly and take advantage of the price increases. Murren said that the real estate value of the company is far above the enterprise value of the company, and that appeals to Paulson. Paulson also likes the MGM brand. MGM is the biggest casino operator in Las Vegas.
Watch the video:
(Source: Bloomberg)
John Paulson, the star investor during the financial crisis, surprised his followers recently by taking a 180-degree turn in his view towards the US real estate market. In a recent speech, he advised people buy a house for themselves and lend money to relatives and have them buy a house.
One of the investments along that thesis Paulson made is buying into MGM Resorts. GuruFocus data shows that he owns 43,800,000 shares as of 06/30/2010, which accounts for 1.86% of the $22.7 billion portfolio of Paulson & Co.. Here is data we have:
This morning, Jim Murren, chief executive officer of MGM Resorts International, spoke with Deirdre Bolton on Bloomberg Television's "InsideTrack." He talked about the outlook for refinancing the CityCenter development's $1.8 billion loan, MGM's liquidity position and the outlook for the casino industry in Las Vegas. He presented a quite bullish view of his company.
In the last one minute of the interview, Murren talked about why John Paulson invested into MGM. In Paulson’s view, US will have inflation. He does not know when inflation will hit us, but it will come. When inflation comes, hotel companies like MGM can raise prices instantly and take advantage of the price increases. Murren said that the real estate value of the company is far above the enterprise value of the company, and that appeals to Paulson. Paulson also likes the MGM brand. MGM is the biggest casino operator in Las Vegas.
Watch the video:
(Source: Bloomberg)
