Baron Funds: “We Believe MGM is Valued at a Significant Discount”

Baron Funds, an asset management company, released its “Baron Real Estate Fund” second quarter 2022 investor letter. A copy of the same can be downloaded here. Baron Real Estate Fund (the “Fund”) declined 20.62% (Institutional Shares) in the second quarter of 2022, underperforming its primary benchmark, the MSCI USA IMI Extended Real Estate Index (the “MSCI Real Estate Index”), which declined 17.12%. The Fund underperformed the MSCI US REIT Index (the “REIT Index”), which declined 17.16%. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.

In its Q2 2022 investor letter, Baron Real Estate Fund mentioned MGM Resorts International (NYSE:MGM) and explained its insights for the company. Founded in 1986, MGM Resorts International (NYSE:MGM) is a Las Vegas, Nevada-based global hospitality and entertainment company with a $13.3 billion market capitalization. MGM Resorts International (NYSE:MGM) delivered a -24.20% return since the beginning of the year, while its 12-month returns are down by -15.75%. The stock closed at $34.02 per share on September 14, 2022.

Here is what Baron Real Estate Fund has to say about MGM Resorts International (NYSE:MGM) in its Q2 2022 investor letter:

MGM Resorts International is a leading global casino and entertainment company. At its recent price of only $30 per share, we believe MGM is valued at a significant discount to our reasonable $50 per share estimate of the sum-of-the-parts value of its business. Further, the company’s domestic operations are valued at a 18% free-cash-flow yield. Paul Salem, Chairman of the Board, recently acquired shares.”

MGM Grand, Las Vegas

david-vives-O7H0w6s9jG0-unsplash

Our calculations show that MGM Resorts International (NYSE:MGM) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. MGM Resorts International (NYSE:MGM) was in 46 hedge fund portfolios at the end of the second quarter of 2022, compared to 59 funds in the previous quarter. MGM Resorts International (NYSE:MGM) delivered a 13.17% return in the past 3 months.

In September 2022, we also shared another hedge fund’s views on MGM Resorts International (NYSE:MGM) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.

Disclosure: None. This article is originally published at Insider Monkey.