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]

The company's BetMGM joint venture reports strong revenue and earnings growth in the fourth quarter. ...

With a market cap of $9.2 billion, MGM Resorts International (MGM) is a global gaming and entertainment company operating casino resorts and digital gaming platforms across the United States, China, and other international markets. Through segments including Las Vegas Strip Resorts, Regional Operations, MGM China, and MGM Digital, the company offers integrated resort experiences and online gaming services such as sports betting and iGaming via BetMGM. Shares of the Las Vegas, Nevada-based company have la ...

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]

Core Insights - Longleaf Partners Fund reported a return of 3.35% in Q4 2025, outperforming the S&P 500's 2.66% but underperforming the Russell 1000 Value Index's 3.81% return, indicating a challenging year without standout performers [1] - The firm emphasizes strengthening portfolio outcomes over chasing short-term winners, suggesting a strategy focused on real companies during periods of excessive speculation [1] Company Highlights - IAC Inc. (NASDAQ:IAC) is highlighted as a leading media and internet company, with a one-month return of -3.167% and a 52-week gain of 13.37%, closing at $39.51 per share with a market capitalization of $3.167 billion on January 16, 2026 [2] - IAC's strategy includes disposing of all assets except for People Inc. and a 25% stake in MGM Resorts, with plans for share repurchase and increasing its stake in MGM to address valuation disconnects [3] - The spinoff of Angi, a home services marketplace, was a significant move for IAC, with the firm purchasing more shares post-spin at a depressed price, indicating confidence in Angi's turnaround [3] Industry Context - MGM Resorts faced a weaker performance in Las Vegas in 2025 due to tough comparisons from previous years, but strong results from BetMGM and regional properties helped stabilize the business [3] - The market narrative suggests that Las Vegas has peaked, but both IAC and MGM believe that the unique appeal of Las Vegas cannot be replicated, positioning MGM as a market leader [3] - MGM's management has made strategic corrections, including selling lower-quality properties at higher multiples and withdrawing from a New York City casino bid, which has allowed for significant share repurchases over the past five years [3]

Core Insights - The Zacks Gaming industry is facing challenges due to strained consumer spending, rising regulatory complexity, and compliance costs, but is benefiting from increased gaming revenues in Macau and strong demand for sports betting [1][3][4][5][6] Industry Overview - The Zacks Gaming industry encompasses companies that operate integrated casinos, hotels, and entertainment resorts, as well as those providing technology products and services in lotteries, electronic gaming, and sports betting [2] Key Themes - **Consumer Spending Pressure**: The U.S. gaming industry is experiencing reduced discretionary spending due to persistent inflation and rising costs, leading to more conservative spending habits among consumers [3] - **Regulatory Complexity**: The expansion of sports betting and iGaming is creating a fragmented regulatory environment, increasing compliance costs and compressing margins for operators [4] - **Macau Gaming Revenues**: Macau's gaming revenues rose 14.4% year-over-year to approximately MOP21.09 billion ($2.63 billion), indicating a steady recovery in the mass-market segment [5] - **Sports Betting Growth**: The legalization of sports betting across multiple states has significantly contributed to industry growth, with various digital platforms facilitating wagers [6] Industry Performance - The Zacks Gaming industry has underperformed the S&P 500 Index, rising 7.2% over the past year compared to the S&P 500's 15.7% growth [10] - The industry's current trailing EV/EBITDA ratio is 18.64, consistent with the S&P 500, with historical trading ranges between 14.16X and 28.46X over the past three years [13] Notable Companies - **Las Vegas Sands (LVS)**: Benefiting from strong travel demand and improved conditions in Macau and Singapore, with a 22% share price increase over the past year and a 10.1% rise in 2026 earnings estimates [16][17] - **Rush Street Interactive (RSI)**: Achieved record revenues with a 20% year-over-year increase, supported by a 46% surge in North American online casino monthly active users, and a 38.3% share price increase [20][21] - **Brightstar Lottery (BRSL)**: Strengthened its balance sheet post-IGT Gaming divestiture, with a 5% increase in 2026 earnings estimates despite a 19.9% decline in share price over the past year [24]

Core Viewpoint - MGM Resorts International has shown resilience despite challenges in the Las Vegas tourism sector, with potential for a strong performance in 2026 [1][2]. Financial Performance - For the nine-month period ending September 30, 2025, MGM reported essentially zero revenue growth compared to the same period in 2024, reflecting weak results from Las Vegas Strip operations [5]. - The company experienced a 4.9% drop in adjusted EBITDA for the same nine-month period, while Caesars Entertainment reported a 4.2% decline [6]. Market Position - MGM's stock has underperformed compared to the S&P 500, but it is currently up 2.57% year-to-date [2]. - MGM trades at a forward P/E ratio of 15, significantly lower than Caesars' 29, indicating potential for valuation expansion [8]. Future Outlook - Analysts have a wide range of earnings forecasts for MGM in 2026, with estimates ranging from $0.30 to $3.31 per share [8]. - Positive developments, such as improved Las Vegas Strip results and growth in BetMGM and MGM China, could drive a rebound in stock valuation [9][10].

Core Insights - MGM Resorts International has remained profitable, but long-term investors have not seen favorable returns compared to the S&P 500 [1] - Over the past one, three, and five years, MGM Resorts has significantly underperformed the S&P 500, suggesting that investors would have been better off with an index fund [2][5] - Despite past underperformance, there may still be potential for MGM Resorts to outperform in the future [3][7] Performance Comparison - MGM Resorts' performance over different timeframes compared to the S&P 500: - 1 Year: MGM -17.4%, S&P 500 +13.9% (Difference: -31.3 percentage points) [5] - 3 Years: MGM -15.3%, S&P 500 +72.4% (Difference: -87.7 percentage points) [5] - 5 Years: MGM +17.4%, S&P 500 +83.8% (Difference: -66.4 percentage points) [7] - The lack of dividends since 2022 exacerbates the total return difference when compared to the S&P 500 [5] Factors Behind Underperformance - Initial excitement around BetMGM, the online casino and sportsbook joint venture, drove stock prices up during the pandemic despite poor performance in land-based casinos [6] - As the market recognized that online gaming companies were far from profitability, enthusiasm waned, leading to a decline in MGM's stock price from 2022 onward [8] Recent Developments - MGM Resorts' revenue returned to pre-pandemic levels in 2022, aided by "revenge travel" trends, but concerns about future prospects have emerged for 2024 [9]