The big guy’s selling, but don’t fret

May 29, 2001 10:21 AM

If you’re an investor in MGM Mirage, you may be interested to know your biggest equity partner, Kirk Kerkorian, has sold nearly 4 million shares recently. But not to worry, observers say.

Apparently, no one is. The stock has barely registered a twitch since the 80-something master of the deal reported sales of 1.89 million shares last Monday for $57.5 million. Trading in MGG was heavier than normal that day, but the stock closed 45 cents higher than the $30.50 per share Kerkorian got. The stock closed Friday even higher at $31.40. It’s off its 52-week high of $38.31, reached last September, but well above its 52-week low of $22.50 - which was reached on March 23, six weeks after Kerkorian unloaded 1.89 million shares at $30.

Between those sales and the ones last week, Kerkorian has pocketed close to $115 million. A lot of zeros, to be sure, but walking-around money for the guy who once made a $22.8 billion run at Chrysler.

"He’s indicated from time to time he’ll be diversifying his portfolio, and that could involve some sales of stock," says Bear Stearns analyst Jason Ader.

Which is not to say there weren’t a few anxious holders of MGG last week.

"We’ve been telling our investors there’s nothing wrong," Ader says.

MGM Mirage earned 53 cents per share in the first quarter, shattering the Street’s estimate by 9 cents. The estimate for the next quarter is 42 cents, 2 cents above last year.

"The company is doing great," Ader says.

So what’s 4 million shares?

"It’s not a significant amount, but it’s not a small amount either," says analyst Lawrence Klatzkin of Jeffries & Co., who rates MGG a "Buy."

"I may speak to them about it," says Brian Egger of Credit Suisse First Boston. He maintains his "Buy" rating.

So does Andrew Zarnett of Deutsche Banc Alex. Brown. "I think he’s trying to get his estate in order a little more. He’s not a youngster."

Of course, there’s no word on more sales in the offing. At the corporate offices of MGM Mirage, they’ll tell you they don’t speak for the insider activities of their largest shareholder.

"He consistently has not consulted with me on things like that," spokesman Alan Feldman says dryly.