Steven Cohen’s Point72 Asset Management Loads up on MGM Resorts Shares

Posted on: November 28, 2019, 01:02h. 

Last updated on: November 29, 2019, 10:39h.

Todd Shriber @etfgodfather Read More

Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Point72 Asset Management, the family office run by former hedge fund boss Steven Cohen, gobbled up shares of MGM Resorts International (NYSE:MGM) during the third quarter. That makes the gaming company one of the asset manager’s top equity holdings.

MGM, the largest operator on the Las Vegas Strip, was one of several stocks Point72 added to its portfolio during the July through September period, and the only gaming company.

According to filings with the Securities and Exchange Commission (SEC), Connecticut-based Point72 bought 6.17 million shares of the Bellagio and Mirage operator during the third quarter, vaulting the gaming stock to the eighth spot among the family office’s equity positions at 1.05 percent. Among new purchases by the firm, only ServiceNow, Inc. (NYSE:NOW), a cloud computing company, outweighed MGM.

Shares of the Borgata and Mandalay Bay operator scuffled during the September quarter, as investors ditched gaming stocks amid concerns about the US/China trade battle and fears about a slowing global economy. However, Cohen’s MGM purchase now looks prescient, as the stock has surged 16 percent since the start of the current quarter.

Joining Some Counterparts

MGM has been a favored gaming stock in the hedge fund community for some time. For example, Keith Meister of Corvex Management and Paul Salem of Providence Equity Partners L.L.C., an asset manager, occupy seats on the gaming company’s board.

In addition to Meister’s Corvex Management and Cohen’s Point72, Canyon Capital Advisors, Two Sigma Advisors, and Blue Harbour Group are among the hedge fund owners of MGM stock.

However, various professional investors have different objectives and holding periods for the companies they become involved with. Meister has pushed for MGM to unlock value for shareholders by monetizing real estate holdings, something he’s been successful, as the company announced earlier this quarter sales of the Bellagio and Circus Circus on the Las Vegas Strip.

That process took some time and showed some level of commitment on the Corvex boss’s part. Conversely, Cohen’s Point72 holds approximately 1,200 stocks, and the average holding period for those positions is just 3.5 quarters, or less than a full year.

Data indicate Cohen is fond of consumer discretionary stocks, the sector in which MGM resides. That group accounted for 17.28 percent of the fund’s equity exposure at the end of September, trailing only the 21.24 percent allocated to technology names.

Other Gaming Holdings

At least for now, MGM is by far Point72’s largest gaming position, but the family office has other exposure to the industry. For example, gaming real estate investment trust (REIT) Vici Properties (NYSE:VICI) is the family office’s No. 13 holding at 0.84 percent, or just over six million shares.

Cohen’s firm also has exposure to Las Vegas Sands (NYSE:LVS), the largest US gaming company by market capitalization, plus Wynn Resorts Ltd. (NASDAQ:WYNN) and Penn National Gaming (NASDAQ:PENN).

Smaller gaming positions for the firm include Eldorado Resorts (NASDAQ:ERI) and Red Rock Resorts (NASDAQ:RRR), the operator of the Palms.