High-ranking executives at MGM Resorts International and Red Rock Resorts are increasingly investing in their companies as the stocks experience a slump.
Recent filings with the Securities and Exchange Commission (SEC) revealed that several top-level executives at MGM Resorts have recently increased their stakes in the casino operator. Notably, Chairman Paul Salem acquired 147,500 shares, CEO Bill Hornbuckle purchased 58,900 shares, and CFO Jonathan Halkyard bought 10,000 shares. Collectively, their acquisitions totaled an impressive $8.5 million.
The average purchase prices for these MGM executives ranged between $33.465 and $34.00 per share. Given that MGM’s stock closed at $36.44 today, these acquisitions are already proving to be profitable. This insider buying occurred amid a period of stock decline for MGM and the broader casino gaming sector, driven by concerns over a slowing global economy and deteriorating U.S. employment data.
At the close of the U.S. markets today, MGM’s shares were 24.47% below their 52-week high, a steep decline that enters bear market territory when a stock falls 20% from its recent high. Over the past week, MGM stock has dropped by 15.20% and is down 18.44% year-to-date.
Meanwhile, MGM is not the only gaming company witnessing a surge in insider buying. Recent SEC filings show that Red Rock Resorts CEO Frank Fertitta has acquired 134,000 shares, and his brother Lorenzo, who serves as vice president and a director, has added 66,000 shares to his holdings. Despite recent turbulence, Red Rock shares have only seen a modest decline of 5.74% over the past week and 3.74% over the past month.
Following these purchases, Lorenzo Fertitta holds 47.51 million shares of Red Rock, while Frank Fertitta owns 45.98 million, according to Form 4 filings with the SEC.
This wave of insider buying at MGM and Red Rock is a welcome change in the gaming industry, where there has been minimal buying activity from insiders for most of the year. Earlier this year, there were minor purchases by insiders at Caesars Entertainment, but little else of note across the gaming sector.
Conversely, some evidence of insider selling has been observed in the industry. Between late February and March, insiders at Boyd Gaming, including members of the Boyd family, sold approximately $53.4 million worth of shares before the company’s first-quarter earnings report, which subsequently led to a stock decline.
While insiders can sell shares for a variety of reasons, not all of which are negative, insider buying is generally seen as a bullish signal by analysts and investors. When board members and executives invest in their company’s stock, it is viewed as a positive sign because it suggests they have confidence in the company’s future performance. Wall Street appreciates this “skin in the game” approach as it indicates that top executives are aligned with shareholder interests.
