Tuesday, July 22, 2008

GE, MGM and oil money

GE and Mubadala Development announced a financial partnership where they both will contribute $4 billion in equity, headquartered in Abu Dhabi.

They will also become the 10th largest institutional shareholder of GE. BAC, the current 10th largest institutional shareholders owns 119 million shares of GE. To superced BAC, you would need 120 million shares; and at 29, that's another $3.5 billion.

How does this concern MGM?

Because Mubadala Development teamed up with MGM on a $3 billion development deal for non-gaming hotels and resorts in Abu Dhabi and Las Vegas.

Also Dubai World, invested $5.2 in MGM-$2.7 billion invested in City Center and $2.7 billion in stock, purchased at $80.

Last week, on July 16, Merrill Lynch downgraded MGM to underperfom when the stock was 23. Nothing like ringing the bell at the bottom. The analyst said there "was a reduced likelihood that Kirk or Dubai World" will buy the company. I disagreed:

Today an "analyst" at Merrill Lynch downgraded MGM. He cited financing concerns, and the idea that Kirk Kerkorian or Dubai World wouldn't buy the company.

I didn't know that Merrill Lynch was Kirk Kerkorian's spokesman!

Kirk is 91. He probably doesn't know what he is going to do the next day, but Merrill now thinks they can speak for him? And now they see something they don't like in MGM after it has fallen from 100 to 25?

Look at the pricing in the hotels in Vegas. September is almost sold out, and pricing is already much firmer than August.

Disregard Merrill Lynch and buy the stock at 25.

Now do you think that the only people that don't average down are Kirk Kerkorian with his billions and Dubai world with their hundreds of billions?

In the last week LVS went from 29 to 49, and WYNN went from 69 to 97. Land in Vegas, despite the analyst protestations, is worth a lot of money.

Last week, WYNN popped on higher earnings pre-announcement, and the report of 5,300 new jobs in Vegas.

Anyone notice how Las Vegas Sands moved up after we found that he's been bank rolling the Bush administration?

In the Las Vegas casinos that made Sheldon Adelson one of the country's richest men, a "whale" is someone willing to bet millions. Republicans are hoping Mr. Adelson will be their whale this election.

Strapped for cash and facing dozens of tough House and Senate races, the party is expected to lean heavily on outside issue-advocacy groups to mount Republican-friendly campaigns that it can't afford to run itself.

In that largely unregulated arena of independent advocacy, the 74-year-old Mr. Adelson -- a casino tycoon whose battles with Nevada's unions, staunch support for Israel and enormous investments in China have stirred controversy -- is expected to provide one of the biggest bankrolls.

In an interview in Las Vegas during Nevada's February primaries, Mr. Adelson compared his political involvement this year to "the cavalry coming over the hill, bugles blaring," to rescue a dispirited party. "I'm looking for a horse and trying on chaps and boots and stirrups."


Today we saw that oil money is anxious to be deployed.

What are the oil money and Kirk Kerkorian going to do about MGM?

Stay tuned!

My next post on MGM will be entitled, "As Advertised!"

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