After hitting a one-year high of $100.50 in October, the stock hit a one-year low of $57.26 in March.. This morning, MGM opened at $60.58. So far today the stock has hit a low of $57.90 and a high of $60.58. As of 1:45, MGM is trading at $58.84, down $2.23 (-3.9%). The chart for MGM looks neutral but improving, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bearish hedged play on this stock, I would consider a June bear-call credit spread above the $75 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in two and a half months as long as MGM is below $75 at June expiration. MGM would have to rise by more than 28% before we would start to lose money. Learn more about this type of trade here.
MGM hasn't been above $75 since early January and has shown resistance around $65 recently. This trade could be risky if the company's earnings (due out in late April or early May) are a positive surprise, but even if that happens, this position could be protected by resistance MGM might find around $73, where it topped out in January and February.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in MGM.
Playboy Enterprises, Inc. (NYSE: PLA) may not be doing so well, but it's still one of my favorite companies -- I'm a guy, so this makes sense. The company reported Q4 and full-year earnings today -- losses have widened, and I'm sure not a few investors out there are questioning the value of the brand.
Total net revenues saw a slight decline for the quarter, coming in at roughly $86 million. The company lost 3 cents per share on these revenues; in the previous year's quarter, Playboy actually booked a much more pulchritudinous 11 cents per share of positive net income. For the year, total net revenues didn't jump like a bunny -- $340 million versus $331 million. Net income, however, was much better, doubling to 15 cents per share. The company's year-end results benefited from a decline in interest expense, income tax obligations, and other costs. Sales of artwork were also cited by CEO Christie Hefner in the release.
The licensing operations are performing, but domestic TV and publishing are very weak. In fact, it is the publishing segment that really needs attention. It's been needing attention for a long time now -- for the year, subscription sales were down, newsstand sales were down, and advertising revenues rose by the smallest bit.
Long-term, I still have hope for Hugh Hefner's Playboy. It is an American icon, and its logo continues to propel licensing; plus, the company does have a nice presence in Vegas at the Palms Casino Resort. As Jonathan Berr reported back in November, you may want to remember that sex does indeed sell, and one has to assume that Playboy will be supplying that demand for years to come.
Following the announced purchase, Lawrence Klatzkin of Jefferies & Co. told his clients that MGM is one of his top three picks and maintains a "buy" rating. According to Klatzkin, investors can expect to see Dubai World continue to add to its MGM holdings. This will continue to help keep the stock strong and definitely minimize any sort of downside risk.
Dubai, which has been swimming in money since the oil boom brought billions into the economy, has been moving fast over the past decade to branch out in its revenue streams. Seeing the end of the country's oil reserves in the near future, the country has been working hard to become one of the world's top tourist destinations, and moving into Las Vegas gaming is just one more step in the country's strategy to remain a relevant world player once the oil runs dry.
Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor's Observer.
There's a lot of talk about a weak economy, the mortgage meltdown, and a credit crunch, but apparently that isn't stopping people from heading to Las Vegas. According to the New York Times, "some of the city's largest casinos are on pace for a record-setting year. In October alone, gambling revenues on the Las Vegas Strip were up 19.8 percent over the same month last year."
Casinos in other locales aren't doing so well, with some reporting declines in gaming revenues of 5% or more. Experts believe that pricey locales like Las Vegas are less vulnerable to consumer malaise precisely because they cost more -- the mortgage mess just isn't hurting people with a lot of disposable income, at least for now.
Day trip locations that target lower-income gamblers aren't faring nearly as well.
This may have broader implications for investors. If higher income consumers still have the money to drive Las Vegas gaming revenue growth, they also probably aren't going to be cutting back on luxury products like bags from Coach, Inc. (NYSE: COH), which has seen its stock beaten down by worries about consumer spending. The international tourists that are giving Vegas revenue a boost could also help luxury goods companies.
If Coach won't see its sales and margins hurt by an economic slowdown, the stock is cheap.
Las Vegas Sands (NYSE: LVS), a leading international developer of multi-use integrated resorts operated by Sheldon Adelson, is recently down $10.62 to $133.97.
Morgan Stanley said that preliminary Macau gaming revenues are up 55% YoY versus its estimate for 70% and below the Street's estimates.
LVS October option implied volatility of 57 is above its 26-week average of 41 according to Track Data, suggesting larger price fluctuations.
Las Vegas Sands (NYSE: LVS), a leading international developer of multi-use integrated resorts operated by Sheldon Adelson, is recently up $4.42 to $142.73. LVS October option implied volatility of 56 is above its 26-week average of 41 according to Track Data, suggesting larger price fluctuations.
Belden (NYSE: BDC) designs, manufactures and markets signal transmission solutions for data networking and specialty electronic markets. BDC is recently up $3.74 to $52.03 on overseas takeover chatter. BDC has a market cap of $2.1 billion with June quarterly total revenue of $549 million. BDC call option volume of 1,240 contracts compares to put volume of 193 contracts. BDC October option implied volatility of 47 is above its 26-week average of 37 according to Track Data, suggesting larger risk.
Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
Last Friday we learned that O.J. Simpson had been questioned over a break-in at a Las Vegas casino, and today the ex-NFL star had his arraignment hearing today, and was granted bail of $125,000. When we looked at this Friday the details were still fuzzy, but the events of the break-in now point to much more than just a break-in snatch and grab.
In court today O.J. had the following charges handed down to him:
Kidnapping
Robbery with use of a deadly weapon
Burglary while in possession of a deadly weapon
Coercion with use of a deadly weapon
Assault with a deadly weapon
Conspiracy to commit kidnapping
Conspiracy to commit robbery
Conspiracy to commit a crime
If you ask me, "The Juice" got off pretty easy with only $125,000 in bail considering the amount and severity of the charges. The crime occurred last Thursday and O.J. has been in custody since Sunday. Reports indicate that O.J. was subdued during the hearing, and did not enter a plea on the charges.
In case you missed it, ex-footballer and tabloid icon O.J. Simpson is making the news again today. Las Vegas police have confirmed they questioned him regarding a casino hotel break-in that occurred last night.
O.J. Simpson was one of the most liked American celebrities once. He was a former Heisman Trophy winner, an ex-NFL star, and an actor (who can forget his Naked Gun performances?), but he fell from grace in dramatic style following the 1994 murder investigation of his ex-wife Nicole Brown Simpson and her friend Ronald Goldman. While he was eventually found not guilty of the charges in his criminal (and highly televised) case, he will probably never shake off the stigma of the event, and he was later found liable in a wrongful death civic suit.
The current investigation involves a break in that took place at the Palace Station Casino last night. While there are no official details on what, if anything, was taken out of the hotel room, some reports indicate there were sports memorabilia in the room and that one auctioneer had reported that O.J. was simply taking back articles that had been stolen from him.
Las Vegas Sands (NYSE: LVS) -- volatility elevated. LVS, a leading international developer of multi-use integrated resorts operated by Sheldon Adelson, is recently trading near its all time high. LVS has a market cap of $41.5 billion. Unconfirmed chatter is circulating that LVS could announce a potential secondary stock offering. LVS October option implied volatility of 48 is above its 26-week average of 40 according to Track Data, suggesting larger price fluctuations.
Build a Bear Workshop (NYSE: BBW) -- volatility elevated into EPS and Strategic Alternatives. BBW, a company providing make-your-own stuffed animal, interactive retail entertainment experience, is recently up 40 cents to $17.44. BBW is expected to report EPS on 10/18. On 9/11, Buckingham Research reiterated its Accumulate rating on BBW and lowered its price target on BBW to $25 from $29. Buckingham Research says, "the company is addressing weakness in the top-line with more frequent introductions of new product and more targeted marketing." BBW announced on 6/28/07 it retained Lehman Brothers (NYSE: LEH) to assist in potential strategic alternatives to enhance shareholder value. BBW September option implied volatility of 54 is above its 26-week average of 40 according to Track Data, suggesting larger price risks.
Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
Las Vegas Sands (NYSE: LVS) volatility Elevated into Macao Resort Hotel opening. LVS opened the Venetian Macao Resort Hotel today. Sheldon Adelson, chairman & chief executive officer, said "it is no overstatement to say that the opening of Venetian Macao represents a massive paradigm shift for Macao and the future of tourism development in Asia." Goldman Sachs (NYSE: GS) says "the scale is enormous and the detail impressive." LVS over all option implied volatility of 44 is above its 26-week average of 39 according to Track Data, suggesting larger price fluctuations.
Ameristar Casinos (NASDAQ: ASCA) implied volatility Elevated at 43. ASCA, a Las Vegas based gaming and Entertainment Company, is recently down $0.55 to $28.39. ASCA has a market cap of $1.6 billion with long term debt of $878 million. ACSA over all option implied volatility of 43 is above its 26-week average of 37 according to Track Data, suggesting larger price risks.
Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
Over the past decade or so, Dubai has placed big bets on its ability to become the world's top tourist destination. Now Dubai is taking its plans to sin city itself, Las Vegas. Dubai World, which is the investment holding firm of the Dubai government, has decided to invest $5 billion in MGM Mirage (NYSE: MGM) for a 9.5% stake.
Sometimes, the numbers just wink at you. Ask any gambler. Or ask one of the many people scheduled to tie the knot this coming Saturday, July 7, 2007. They might tell you that there's a little extra magic to getting married on 7/7/7, a date that only comes around once a century. And heck, when it comes to marriage, half of which end in divorce these days, every little bit helps.
The $80 billion American wedding industry doesn't ask why. It's simply gearing up for boffo boxoffice.
According to CNN, marriage planners nationwide are reporting huge demand to take the plunge on this auspicious date. Churches are booked, dress makers are working overtime, and just try getting a Limo that weekend.
Today's Wall Street Journal reports that Kirk Kerkorian has dropped his plans to acquire two of MGM Mirage's (NYSE: MGM) gems, the Bellagio Hotel and the $7.4 billion project City Center, opting instead for a joint venture with Sol Kerzner to create a multi-billion dollar resort at the north-end of the Las Vegas strip.
That news today sent MGM shares down more than 10% in pre-market trading. The stock currently sits at $80.97, down 6.4% this afternoon.
Kerkorian's announcement to acquire the Bellagio and City Center last month seemed to put all of MGM in play, with the company forming a special committee to advise management on how to proceed. Shares of MGM Mirage -- which Mr. Kerkorian owns a 56% stake in -- have jumped as much as 27% since last month's offer.
The real question: Is MGM Mirage still a takeover target? There are a number of analysts who remain convinced that MGM is a prime candidate, possibly by private-equity players looking for land deals. MGM owns a third or more of the Vegas Strip and the land could fetch a pretty penny -- BMO Capital believes a successful bid for MGM could be worth more than $100 a share.
But what about Kerkorian? Dana Cimilluca, a writer for the WSJ, considers Kerkorian's decisions a sign that it may be time for him to retire. She says that Kerkorian has now swung and missed three times: The unsuccessful attempt to ally with another auto maker--General Motors (NYSE: GM), the failed Chrysler (NYSE: DCX) bid and now the retreat from MGM's two gems.
Many thought that Kerkorian's intention was to nudge MGM Mirage (NYSE:MGM) onto the sale block, to see what his 56% of the remaining company assets might fetch in a buyout-friendly climate. The latest deal, with its implications for increased debt and holdings value, apparently caused him to rethink this move, at least for the moment.
MGM Mirage already has a huge footprint in Las Vegas, but remains very aggressive (i.e. carrying a considerable debt load) in pursuing further growth. Its new $725 million Detroit casino is scheduled to open late this year. The CityCenter complex in Las Vegas has tied up $7.4 billion and won't be ready until 2009, and MGM has put another $1 billion into a cooperative venture, MGM Grand Macau, opening later this year. It is also in talks about another huge development on the Cotai strip in Macau.
Those punters who jumped on the bandwagon at the initial announcement of Kerkorian's interest in Bellagio are jumping back off this morning. MGM Mirage stock was down more than 10% in early trading.
It is not a secret that casinos have been investing a lot of resources into catering to their Asian clients, but should it be acceptable for them to actively and aggressively try to pull Asians into their gaming facilities? According to any article from The New York Times, the recent promotional blitz by Las Vegas toward the Asian community has created emotions ranging from concern to downright extreme anger.
There are basically two ways in which Las Vegas casinos are able to lure in and keep the business of wealthy Asian (mostly newly rich Chinese) and Asian-Americans. One is by creating an enjoyable experience inside the casinos. Second is targeted advertising to the Asian demographic.
The first method strives to create an "Asian friendly" environment inside casinos. This method is one that I have absolutely no problem with what-so-ever. The first and most important rule of thumb in running a successful business is to "know your customer," and casinos can not be blamed for spotting the tremendous amount of cash inflows from their Asian clients and creating a more "user friendly" environment.
The second method involves special societal-based advertising campaigns. This is where the slippery slope of ethics begins, and I for one, have a hard time blaming the casinos for their marketing campaigns. The article gives example of Las Vegas and Atlantic City casinos using advertisements in Asian dialects; advertisements placed in community newspapers in nearby cities; and mailers written in a recipient's native language.
MGM Mirage (NYSE: MGM) stock is falling after an analyst at UBS downgraded the stock to "Neutral" from "Buy," citing declining business on the Las Vegas Strip. A Wachovia analyst also cut his estimates for MGM and other casinos, saying that the Vegas market is "uncertain." If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on MGM.
Las Vegas Sands
Last Friday we learned that O.J. Simpson had been questioned over a 
Sometimes, the numbers just wink at you. Ask any gambler. Or ask one of the many people scheduled to tie the knot this coming Saturday, July 7, 2007. They might tell you that there's a little extra magic to getting married on 7/7/7, a date that only comes around once a century. And heck, when it comes to marriage, half of which end in divorce these days, every little bit helps.
It is not a secret that casinos have been investing a lot of resources into catering to their Asian clients, but should it be acceptable for them to actively and aggressively try to pull Asians into their gaming facilities? According to any article from The New York Times, the recent promotional blitz by 
Cramer on BloggingStocks: A troika of opportunity and trouble 
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