Insiders tend to be value investors. If they’re buying company stock, it’s usually because they believe the stock is undervalued.
Here, we are going to highlight an insider transaction at MGM Resorts International (MGM:US). MGM Resorts International is a global entertainment business. The company’s portfolio consists of 29 hotels and casinos in the US and Macau. It also has a joint venture BetMGM, which offers US sports betting and online gaming. It is listed on the New York Stock Exchange and currently has a market capitalization of $17.62 billion.
MGM Resorts International: Insider Buying
Our insider transaction data shows that on February 17, a director at MGM Resorts International, Janet Swartz, purchased 5,628 MGM shares at a price of $44.13 per share. This purchase cost the insider around $250,000.
Strong Sector Experience
This trade is worth highlighting for a couple of reasons.
Firstly, Janet Swartz has a background in the travel industry. She has led Carnival’s Princess Cruises expansion throughout Asia, where the company has opened eleven new offices. She was also involved in the acquisition of P&O Princess in 2002, which suggests she is comfortable at evaluating companies and working out their intrinsic value.
Secndly, our insider transaction data shows this is the first insider transaction by an individual at the company for over a year. Having joined as a director in 2018 it is notable that Ms. Swartz has chosen to build a sizable position now, as she is likely to know the business very well.
Record Q4 EBITDAR
MGM Resorts International bounced back in 2021 after a tough year in 2020 when it was heavily impacted by Covid-19.
Q4 results showed that the company finished the year strongly with Las Vegas Strip Resorts and Regional Operations Adjusted Property EBITDAR increasing 84% and 36% respectively, compared to the fourth quarter of 2019, when Covid-19 had not yet hit the business.
Consolidated net revenue of $3.1 billion in Q4 was 105% higher than Q4 2020 when the Covid-19 pandemic was hitting the business hard. Diluted EPS for the quarter of $0.23 was a big improvement on the $0.92 loss posted in the last quarter of 2020.
“Our record fourth quarter results are a testament to our talented team across the globe, our sharpened focus on operational efficiency and the proven resiliency of demand for the service and experiences that we provide at MGM Resorts. The strategic milestones we achieved in 2021 position us for further success in 2022, and we remain excited about our long-term opportunities,” said Bill Hornbuckle, CEO and President of MGM Resorts International.
On the back of these strong results and optimistic outlook for the business, we see the recent insider buying at MGM Resorts International as bullish. The director is indicating that she believes the share price will move higher in the future.