Mike Winston of Winston Capital Partners, InvestPitch presentation produced by sumzero and Institutional Investor on the long case for MGM Holdings Inc (OTCMKTS:MGMB).
Buy MGM Holdings Inc (OTCMKTS:MGMB) because the stock has 33 points of upside (+53%) and 10 points of downside (16%), a reward/risk ratio of better than three to one. MGMb (Metro Goldwin Mayer) is a so-called mini-major movie studio that produces a handful of films each year and maintains no physical production facilities. The company also makes TV projects, owns the MGM cable network, and a 19% interest in the EPIX cable network. In addition, MGMb owns a content library that includes 4,100 movies and 10,000 TV episodes. The content library, TV production and EPIX each add stability to lumpy profits from the movie business. The studio was formed in 1924 and releases film and television content under Metro-Goldwyn-Mayer, United Artists and Orion Pictures. MGM owns the James Bond franchise, and maintains a 50/50 partnership with Sony Corporation (NYSE:SNE) (TYO:6758) on The Hobbit trilogy. MGMb also partnered (75/25) with Sony, on a limited basis, to co-produce Skyfall as well as the next James Bond film due 2015. In July 2012, MGM Holdings Inc (OTCMKTS:MGMB) filed a private S-1 under the Jobs Act. No word yet on the timing of an IPO, but on 9/13/13, management adopted a poison pill and announced a $75mm buyback. Each quarter the company posts recent financials to its web site and hosts a conference call; in the past few weeks they have started to provide historical financial information.
Kirk Kerkorian has bought and sold the studio numerous times over the past thirty years. The company filed and then emerged from a pre-packaged bankruptcy in 2010. The 2010 reorganization followed Kerkorian’s 2004 sale of MGMb for $5bn to an LBO consortium backed by Sony, Comcast, TPG and Providence Equity Partners. While the company was in Chapter 11, Carl Icahn made two separate (rebuffed) offers to buy up MGMb debt in order to merge with LionsGate. Icahn was also a major shareholder of MGMb until around the time of the S-1 filing, when he sold his stake back to the company for $590mm. via Mike Winston of Winston Capital Partners: Long MGM Holdings.