Ticker Shock: Does MGM Mirage Have Cards Up Its Sleeve?
Make it 3 days in a row - a trifecta, of sorts. Earlier this week, I had an annoying coffee-drinker next to me on my commute. Next, I sat by a guy that snored like a buzzsaw. And yesterday, I had the distinct privilege of sitting right next to a sick guy, who had ungodly noises emanating from somewhere deep within his body as he compulsively cracked his knuckles the whole way home.
Enough said.
Asian stocks rocketed higher overnight. The Hang Seng was up more than 7% and the Nikkei was up more than 4%. European stocks were in positive territory this morning as well. And here in the US, we're currently trading higher.
Here's what I’m focused on this morning:
MGM Mirage (MGM):
Is there a wild card about to be played?
About a week or so ago, the chips looked way down for the big-name casino. There was chatter that a project it was working on might be pondering bankruptcy. Then, this interesting bit of news appeared: “Investment firm Colony Capital LLC is having early discussions with the owners of the Las Vegas CityCenter development about a potential investment in the project.”
Will these talks bear any tangible fruit?
I certainly hope so. But what I find myself asking is what type of leverage MGM really has with Colony; what would it have to give up in order to nail down an investment?
I think MGM is a great company, but it’s in a pretty lousy situation right now. I plan on staying on the sidelines, although I do want to point out that the stock could get a goose in today’s session on the heels of this news. I plan on keeping an eye peeled and reporting back if this story develops.
Dow Chemical (DOW): Finally - some good news today for the Michigan-based chemical giant.
It closed on the Rohm & Haas (ROH) deal. And this is a big positive, in that it should get management and the board’s minds on running the combined company, taking advantage of opportunities and finding cost savings. (If you’ll remember, the company had seemed a bit distracted before, as this was a long and arduous courtship.)
It also will reportedly sell Morton’s Salt to pay down debt - another positive. Per the Associated Press: “Dow said the Morton Salt divestiture is expected to close in mid-2009.”
I think the shares move higher in today’s session, and that longer-term, they could rock as well. Keep in mind that Rohm & Haas is engaged in high-margin-type work, so this could give a nice goose to earnings.
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