Dubai World Sold Stock in MGM Resorts Before the Las Vegas Massacre

We begin with an insider trade that was (maybe) not an insider trade. The insider trader report of Market notes many sell orders by MGM Resorts International CEO James Murren in the third Quarter of 2017 (9/8/2017: $10.0 million; 9/7/2017: $8.8 million; 8/9/2017: $1.8 million; 7/31/2017: $1.8 million) [Table: Insider Trades by Quarter for MGM Resorts International (NYSE:MGM). Market, October 9, 2017.]

However, it omits a major insider trade reported by [Insider Actions for MGM Resorts International,, October 6, 2017.]: the giant sell order on September 7, 2017 of Istithmar World Capital PJSC, 5.2 million shares, $176 million (approx. 1% of the stock of MGM).

The major shareholder in MGM in the last decade was Kirk Krekorian, and he has been consistently reducing his holdings. Krekorian, through his Tracinda Corp., reduced his holdings from 51% in 2007, [] was down to 16.2% in June 2015, died leaving a will calling for the liquidation of his remaining stake in MGM Resorts. [] On about October 9, following his recent death, the Tracinda stake was down to 8.36%. [] It is not that easy to establish who bought the shares Krekorian was selling.

Istithmar World Capital is one of the innumerable subsidiaries of Dubai World worldwide, which bought into MGM Mirage (renamed MGM Resorts International) in 2007, buying 9.4% of MGM (paying four times the market price of each share) and 50% of the disastrous CityCenter real estate development. The Dubai World investment in MGM and CityCenter of $4.68 billion in 2007 was one of the worst bets in Las Vegas history, being worth as little as $1.18 billion in 2014. [] With billions in surplus cash, Dubai may have hired the most incompetent investment advisors in modern history to manage its sovereign wealth enterprises. Worldwide, the continuing losses at state-owned Dubai World in 2009-2013 led to bankruptcies in many subsidiaries, foreclosures on hotels worldwide, and the bankruptcy of the emirate of Dubai.

Dubai World’s director on the board, William Grounds, formally represents Infinity World Development. Dubai World’s prominent subsidiaries include DP World, Drydocks World, Dubai Maritime City, Economic Zones World, and Istithmar World. For Dubai World, Infinity World Development, with a mere $1 billion in holdings is just an insignificant shell company, holding stock in a failed venture.

While Dubai World, through its Infinity World Development, held 8.4% of MGM in early 2010 [], and 5.3% in October 2014 [], its shareholdings were invisible by June 2017 []. In early 2013, Sheikh Ahmed bin Saeed al Maktoum, the chairman of Dubai’s Supreme Fiscal Committee, stated that Dubai World wanted to find a buyer for its stake in MGM Resorts: Apparently he was successful.

Moreover, assets are apparently freely moved between Dubai World corporate entities at will, allowing its stake to simply vanish from listings of major investors and allowing what amounts to insider trades that do not consistently appear in lists of insider trades. Five million shares of MGM held by Infinity when sold by Infinity is an insider trade; if the stock is moved to Istithmar and then sold some reporters do not catch the sale as an insider trade. 100% of the Dubai World stake in MGM was held by Infinity and 0% was held by Istithmar: So where did the 5 million shares sold on September 7 some from? Infinity World Development seems to be the only possible source. And yet no transfer between Infinity to Istithmar was every reported.

On the day after the October 1 attack, the stock of MGM Resorts International, which owns the Mandalay Bay Resort & Casino, fell 5%. []

Selling on September 7, Dubai World saved almost $8 million. It does not seem like much. Of course, a much large decline in share prices could have taken place.