William Hornbuckle, President and CEO of MGM Resorts International (MGM), recently bought 58,900 shares. The buy increased his position by 12%, and came to a total cost of $1.99 million.
A company director bought 147,500 shares on the same day, shelling out $4,986,090 to increase his stake by 9%. And the company CFO bought $340,000 in shares, also on the same day. These mark the first insider buys at MGM in the past two years, reversing a trend of sales.
Overall, MGM insiders own 22.1% of shares.
The resort and casino operator is down over 20% in the past year, as fears of a slowdown in consumer spending have weighed on the sector. Operationally, MGM’s earnings are off 7%, although their revenues are nearly 10% higher.
At current prices, shares trade at 13 times earnings, a reasonable valuation for the space.
Action to take: MGM shares have shot down over 20% in the past month, a move that looks overdone. The stock can see low double-digit returns over the coming months as it rebounds from the latest selloff.
MGM does not currently pay a dividend.
For traders, the December $45 calls, last trading for about $1.00, could see high double-digit returns on a move higher in shares over the coming months. Traders will have enough time to take profits well before expiration.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.