Fund Performance - Longleaf Partners Global Fund returned 5.27% in Q4 2025, outperforming MSCI World and MSCI World Value which returned 3.12% and 3.34% respectively [1] - The Fund achieved a total return of 16.72% for the year, compared to 21.09% and 20.79% for the respective indexes [1] - Underperformance in 2025 was attributed to underweight exposure in Financials, holding cash, and lack of late-cycle Industrials [1] MGM Resorts International - MGM Resorts International (NYSE:MGM) stock closed at $37.14 on March 19, 2026, with a one-month return of 0.95% and a 52-week gain of 18.20% [2] - MGM Resorts has a market capitalization of $10.158 billion [2] - The company faced a relatively weaker performance in Las Vegas in 2025 due to challenging comparisons after several strong years, but saw a turnaround at BetMGM and strong performances at regional properties and Macau [3] IAC and MGM Relationship - IAC, which holds a 25% stake in MGM, plans to dispose of all assets except for People Inc. and is focused on closing the valuation disconnect of its assets [3] - IAC's capital allocation options include share repurchase and increasing its stake in MGM, with actions already being taken in both areas [3] - MGM's management has corrected pricing mistakes and made strategic moves, including selling a lower quality property for a higher multiple and withdrawing from a New York City casino bid, which has freed up capital for share repurchases [3]

MGM Resorts International Conference Call Summary Company Overview - **Company**: MGM Resorts International (NYSE:MGM) - **Date**: March 12, 2026 - **Speakers**: CEO Bill Hornbuckle, CFO Jonathan Halkyard Key Industry Insights Performance Trends - High-end business is performing well, with a progressive improvement noted in Q1 2026 compared to previous months [2][3] - January, February, and March showed positive trends, aided by events like Super Bowl and Chinese New Year [2][3] - Anticipation of growth in 2026, with significant programming planned for April and May [3] Market Dynamics - Softness observed in the value segment (Excalibur and Luxor), prompting aggressive programming initiatives [5] - The company aims to respond to market fluctuations and enhance offerings to attract visitors [5] - Group business and catering services are performing better than expected, with no signs of spending pullback [12] Visitor Profile and Experience - Las Vegas is evolving, offering better value for experiences, with a focus on sports and events [13][14] - The company is adapting to a new visitor profile, emphasizing experiential offerings [13][14] International Travel and Economic Factors - International travel to Las Vegas has decreased, with a focus on regaining Canadian visitors [16] - The company is monitoring economic factors, including energy prices and supply chain impacts, but currently sees no significant threats [18] Financial Performance Revenue and EBITDA - The company reported a strong first quarter, with gaming revenue performing well, particularly in high-end segments [11][12] - Luxor and Excalibur contribute approximately 6% to overall EBITDA, indicating a need for strategic focus on these properties [11] Capital Expenditures - Recent CapEx projects focus on high-end gaming and improving connectivity between luxury properties [24][25] - The company is investing in Japan, with expectations of significant cash flow from the project [63][70] Digital and Gaming Ventures BetMGM Performance - BetMGM has been a bright spot, with significant investments yielding high returns and dividends [46][47] - The company holds a strong market share in online sports betting and iGaming, with expectations for continued growth [46][49] Regulatory Landscape - The regulatory environment for iGaming is evolving, with potential for expansion in several states [53][54] - The company is cautious about illegal sports betting and is monitoring the situation closely [56][58] Strategic Outlook Long-term Growth - The company is focused on steady growth in Las Vegas and regional markets, with digital initiatives and Japan as key long-term strategies [73] - The potential for increased free cash flow per share is anticipated due to share buybacks and growth in digital and international ventures [73] Competitive Landscape - The company acknowledges competition from new properties but believes it has maintained its market position effectively [21][22] - The management is prepared for competition from established brands like Hard Rock and is actively strategizing to enhance its offerings [22] Conclusion - MGM Resorts International is navigating a dynamic market with a focus on high-end experiences, digital growth, and international expansion. The company is optimistic about its future performance, driven by strategic investments and programming initiatives aimed at enhancing visitor engagement and revenue generation.

Core Thesis - MGM Resorts International presents a compelling investment opportunity driven by multiple near- and long-term catalysts despite a temporary slowdown in Las Vegas tourism and room remodels at MGM Grand in 2025 [1] Share Buybacks and Earnings - MGM is aggressively buying back 7-8% of its shares annually, funded by a business generating a 14.2% Owner Earnings yield [2] - BetMGM, the company's digital sports betting and iGaming joint venture, turned profitable in 2025, distributing $100 million back to MGM and setting the stage for $125-200 million in cash distributions in 2026 [2] Near-Term Catalysts - The Northfield Park sale, closing in the first half of 2026, will inject $420 million of proceeds for share repurchases [3] - Stabilization of Las Vegas Strip operations is expected as MGM Grand's remodels are completed, conventions return, and RevPAR growth resumes [3] - MGM China's ongoing recovery continues to provide $200-300 million in annual dividends, further funding capital returns [3] Long-Term Potential - MGM's 42.5% stake in Osaka represents a future $350-450 million annual Owner Earnings contribution, supported by monopoly positioning and a lower tax rate relative to Macau [4] - GAAP net income is expected to swing from loss to profit in 2026 as one-time charges abate, attracting investor attention [4] Valuation and Target Price - At the current share price, MGM trades at roughly 7x Owner Earnings with significant buyback acceleration underway [5] - With stabilized core operations, growing digital cash flows, and Osaka's long-term potential, MGM Resorts offers an attractive risk/reward profile with a bullish target of Buy up to $46 per share [5] Historical Context - MGM's stock price has appreciated by approximately 38.25% since previous bullish coverage, highlighting its asset-light transition, strong brand, disciplined buybacks, and resilient cash flows [6]

Core Thesis - MGM Resorts International presents a compelling investment opportunity driven by multiple near- and long-term catalysts despite a temporary slowdown in Las Vegas tourism and room remodels at MGM Grand in 2025 [1] Share Buybacks and Earnings - MGM is aggressively buying back 7-8% of its shares annually, funded by a business generating a 14.2% Owner Earnings yield [2] - BetMGM, the company's digital sports betting and iGaming joint venture, turned profitable in 2025, distributing $100 million back to MGM and setting the stage for $125-200 million in cash distributions in 2026 [2] Near-Term Catalysts - The Northfield Park sale, closing in the first half of 2026, will inject $420 million of proceeds for share repurchases [3] - Stabilization of Las Vegas Strip operations is expected as MGM Grand's remodels are completed, conventions return, and RevPAR growth resumes [3] - MGM China's ongoing recovery continues to provide $200-300 million in annual dividends, further funding capital returns [3] Long-Term Potential - MGM's 42.5% stake in Osaka represents a future $350-450 million annual Owner Earnings contribution, supported by monopoly positioning and a lower tax rate relative to Macau [4] - GAAP net income is expected to swing from loss to profit in 2026 as one-time charges abate, attracting investor attention [4] Valuation and Target Price - At the current share price, MGM trades at roughly 7x Owner Earnings with significant buyback acceleration underway [5] - With stabilized core operations, growing digital cash flows, and Osaka's long-term potential, MGM Resorts offers an attractive risk/reward profile with a bullish target of Buy up to $46 per share [5] Historical Context - MGM's stock price has appreciated by approximately 38.25% since previous bullish coverage, highlighting its asset-light transition, strong brand, and disciplined buybacks [6]

Group 1 - The U.S. equity markets in Q4 2025 were influenced by optimism regarding potential monetary easing and caution about economic growth and valuations [1] - The Meridian Hedged Equity Fund gained 0.08% in Q4 2025, underperforming the S&P 500 Index which returned 2.66% and the CBOE S&P 500 BuyWrite Index which returned 6.53% [1] - The firm is monitoring factors affecting market returns, including monetary policy and the sustainability of AI investments amid high valuations [1] Group 2 - MGM Resorts International is highlighted as a key contributor to the portfolio performance of the Meridian Hedged Equity Fund [2] - As of February 13, 2026, MGM Resorts International's stock closed at $34.14, with a one-month return of -2.40% and a twelve-month decline of 14.24% [2] - MGM Resorts International has a market capitalization of $9.321 billion [2] Group 3 - MGM Resorts International operates a diversified portfolio of casino resorts and has a growing digital presence through its joint venture, BetMGM [3] - The stock price of MGM increased during the quarter due to positive investor sentiment driven by record results from its Macau properties and the profitability announcement of BetMGM [3] - MGM's commitment to returning capital to shareholders is emphasized as a key reason for its inclusion in the fund [3]

Financial Data and Key Metrics Changes - The company achieved record fourth quarter and full year EBITDA in Macau, with a significant turnaround of nearly $470 million in EBITDA at BetMGM North America [5][12][14] - Las Vegas EBITDA declined 4% year-over-year, showing improvement compared to earlier declines, driven by the completion of the MGM Grand room remodel and a better convention mix [17][24] - Consolidated EBITDA growth was up 20% in the fourth quarter, indicating strong overall performance [83] Business Line Data and Key Metrics Changes - MGM China reported a record high quarterly and full year segment adjusted EBITDA, achieving a 16.5% market share in the fourth quarter [12][19] - BetMGM saw a 24% increase in monthly player volumes and a 14% increase in active player days, with a target of reaching $500 million in Adjusted EBITDA by 2027 [14][21] - MGM Digital experienced a 35% growth in net revenues, driven by strong performance in key international markets [21] Market Data and Key Metrics Changes - The Las Vegas market is showing signs of stabilization, with expectations of increased visitation due to major events like the Super Bowl and the World Cup [11][24] - The company has more group and convention room nights booked for future years than ever before, indicating strong demand [8][16] - MGM China is focused on maintaining high service levels and quality over quantity, which has resulted in stable margins in a competitive environment [19][54] Company Strategy and Development Direction - The company is investing in upgrading experiences across its portfolio, including luxury offerings and technology innovations to enhance customer experience [6][10] - MGM Resorts is pursuing a growth pipeline that includes digital initiatives and the development of MGM Osaka, expected to be the world's largest integrated resort [6][15][24] - The company is focused on operational efficiencies and leveraging technology to drive profitability [10][16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about growth in Las Vegas, citing a favorable outlook for conventions and high-end customer engagement [30][31] - The company is monitoring macroeconomic factors that could benefit its operations, including favorable tax regulations and improvements at the Las Vegas airport [16][24] - Management highlighted the importance of maintaining a strong balance sheet and cash flow to support growth opportunities [24][76] Other Important Information - The company repurchased shares totaling $37.2 billion in 2025, reducing its share count by almost 50% over the last five years [22][76] - MGM China announced new branding fee terms that will increase cash flow for MGM Resorts, expected to generate over $50 million in incremental cash flow [20] Q&A Session Summary Question: Path to growth in Las Vegas - Management discussed factors contributing to growth, including occupancy stabilization and upcoming events like ConAg [28][30] Question: One-off items in Q4 - The hold was above average, contributing approximately $20 million to Las Vegas' bottom line, with some unusual corporate expenses noted [32] Question: Value customer stabilization - Management highlighted initiatives to address value-conscious customers and improve visitation [36][37] Question: Casino resiliency and revenue growth - Management noted strong performance in high-end gaming and effective marketing strategies driving revenue growth [39][40] Question: Regional segment performance - The regional business remains steady, with investments in high-limit table rooms yielding positive results [63] Question: Gaming loss tax deductibility - Management is monitoring the impact of the 90% gaming loss tax deductibility and advocating for a fix [71]

Financial Data and Key Metrics Changes - The company achieved record fourth quarter and full year EBITDA in Macau, maintaining margins and market share [5][12] - Las Vegas EBITDA declined 4% year-over-year, showing improvement compared to earlier declines [17] - Consolidated EBITDA growth was up 20% in the fourth quarter [80] Business Line Data and Key Metrics Changes - BetMGM reported a nearly $470 million EBITDA turnaround, with a $135 million distribution to MGM in Q4 [5][13] - MGM China achieved a record high quarterly and full year segment adjusted EBITDA, with a 16.5% market share in Q4 [12][19] - MGM Digital saw a 35% growth in net revenues, driven by momentum in key international markets [21] Market Data and Key Metrics Changes - The Las Vegas market is experiencing mid-single-digit revenue growth in 2026, with a strong convention calendar [7][8] - MGM China reported a 21% increase in net revenues and a 31% increase in segment adjusted EBITDA in Q4 [19] - The company maintained a strong performance in regional operations, achieving the best-ever fourth quarter slot win [19] Company Strategy and Development Direction - The company is focused on luxury offerings and enhancing customer experiences, particularly in Las Vegas [10][11] - MGM is investing in major projects, including MGM Osaka, which is expected to be the world's largest integrated resort upon opening [5][14] - The company is leveraging technology innovations to improve operational efficiencies and customer service [10][16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about growth in Las Vegas, citing stabilization and positive trends as 2026 begins [24][29] - The company anticipates a constructive backdrop for growth, supported by macroeconomic factors and increased visitation [15][16] - Management highlighted the importance of maintaining high service levels and adapting to evolving customer preferences [19][51] Other Important Information - The company repurchased shares totaling $37.2 billion in 2025, reducing the share count by almost 50% over five years [22] - MGM China announced new branding fee terms, increasing from 1.75% to 3.5%, which will enhance cash flow for MGM Resorts [20] Q&A Session Summary Question: Path to growth in Las Vegas - Management discussed factors contributing to growth, including occupancy stabilization and upcoming events like ConAg [27][28] Question: Fourth quarter one-offs - The hold was above average, contributing approximately $20 million to Las Vegas' bottom line [31] Question: Value customer stabilization - Management noted initiatives to address value-conscious customers and the importance of large-scale events [34][35] Question: Casino revenue resilience - Management highlighted high-end activity and effective marketing as key drivers of casino revenue despite lower occupancy [37][39] Question: Operating expense growth - Management expects to keep overall expense growth to low single digits, with a significant impact from completed renovations [46] Question: Macau margin environment - Management expressed confidence in maintaining mid- to high-20s margins in Macau, with strong demand for the upcoming Lunar New Year [50][51] Question: Buyback strategy - Management emphasized a balanced approach to buybacks, considering the value of shares versus other cash uses [74][76]

Core Insights - The company's BetMGM joint venture has reported significant revenue and earnings growth in the fourth quarter [1] Revenue Growth - BetMGM's revenue growth indicates a strong performance in the online gaming sector, reflecting increasing consumer engagement and market expansion [1] Earnings Performance - The earnings growth reported by BetMGM suggests improved operational efficiency and profitability, contributing positively to the overall financial health of the company [1]

Core Viewpoint - MGM Resorts International, with a market cap of $9.2 billion, operates casino resorts and digital gaming platforms globally, but its stock has underperformed compared to broader market indices over the past year [1][2]. Financial Performance - MGM reported Q3 2025 revenue of $4.25 billion, exceeding expectations, but shares fell 1.6% due to adjusted EPS of $0.24 missing Wall Street forecasts and declining from $0.54 a year earlier [6]. - The company experienced a net loss of $285 million, primarily due to a $256 million non-cash goodwill impairment and approximately $93 million in other write-offs related to Empire City [6]. - Las Vegas Strip Resorts saw net revenues decrease by 7% year-over-year to $2 billion, with Segment Adjusted EBITDAR falling 18% to $601 million, overshadowing gains in MGM China and BetMGM [6]. Stock Performance - Over the past 52 weeks, MGM's stock has decreased while the S&P 500 Index increased by 16.5%, and year-to-date, shares are down 7.2% compared to a 2% rise in the S&P 500 [2]. - MGM's shares have also underperformed against the State Street Consumer Discretionary Select Sector SPDR ETF, which returned 7.1% over the same period [3]. Analyst Ratings - For the fiscal year ending December 2025, analysts project MGM's adjusted EPS to decline by 7.7% year-over-year to $2.39 [7]. - Among 21 analysts covering MGM, the consensus rating is a "Moderate Buy," consisting of eight "Strong Buy" ratings, 10 "Holds," and three "Strong Sells" [7]. - Goldman Sachs analyst Lizzie Dove raised the price target on MGM Resorts to $33 while maintaining a "Sell" rating [8].

Core Insights - The legalization of sports betting in the U.S. has led to significant market growth, with over $150 billion wagered in 2025, but profitability remains a challenge for many operators [1] Company Summaries 1. DraftKings - DraftKings is the closest to achieving profitability in the digital sports betting space, posting $0.16 in annual EPS in 2025, marking its first year of profitability after five years of losses [12] - Revenue reached $5.46 billion, with quarterly earnings growth of 185% year-over-year, indicating strong operational performance [12] - The stock has seen a 26% decline over the past year, but analysts project a fair value of $45, suggesting a 47% upside if the company can maintain its profitability [13][14] 2. Flutter Entertainment - Flutter Entertainment, the parent company of FanDuel, is the largest operator in the group with a market cap of $30.6 billion and revenue of $15.4 billion [10] - The company reported $3.82 in annual EPS for 2025, down 37% from the previous year, but remains profitable [10] - Analysts see a fair value of $285 for the stock, implying a 63% upside, supported by its global diversification and established profitability [11] 3. Caesars Entertainment - Caesars operates over 50 casino properties and runs Caesars Sportsbook, but reported an annual EPS of -$0.95 in 2025, despite an improvement from -$1.26 in 2024 [7] - The stock has dropped 35% over the past year, trading at $22.37, with analysts maintaining a target of $32, indicating a potential 43% upside if the company can stabilize its digital losses [8] 4. MGM Resorts - MGM Resorts is the only company on the list with a positive one-year performance, up 3.7%, generating $17.3 billion in revenue [5] - The profit margin is low at 0.4%, and earnings fell 70% year-over-year in Q3 2025, indicating operational stress [6] - The stock trades near its 200-day moving average at $34.10, with a modest upside to the $42 analyst target [6] 5. Penn Entertainment - Penn Entertainment reported an annual loss of -$0.59 in 2025, an improvement from -$1.62 in 2024, but remains unprofitable [3] - The stock trades at 0.3x sales and below book value, suggesting market skepticism regarding its ESPN partnership [4] - Analysts have set a target of $19 for the stock, implying a 33% upside, but the company needs to demonstrate its ability to convert ESPN's reach into profitable customer acquisition [4]