Activist investor Daniel S. Loeb is targeting another Hollywood company, Metro Goldwyn Mayer, says a report from The Hollywood Reporter.
As per the report, Loeb has been buying the shares of the Hollywood company from the private market. Recently, the activist investor purchased shares at about $50 a share, which was 28 percent over the last month’s price of $39 a share. The price is also double the price of last year after MGM came out of a pre-packaged bankruptcy.
Why MGM’s Stock is rising?
Continued from part one... Q1 hedge fund letters, conference, scoops etc Abrams and his team want to understand the fundamental economics of every opportunity because, "It is easy to tell what has been, and it is easy to tell what is today, but the biggest deal for the investor is to . . . SORRY! Read More
There are no valid reasons as to why the MGM’s private stock has gained recently, among the reasons given includes investors expecting impressive performance for the latest quarter.
The upcoming earnings from the media and Entertainment Company will be boosted by the returns from the blockbuster movies including James Bond movie Skyfall and especially The Hobbit: An Unexpected Journey. Though, the first quarter included some of the revenues from these movies, but as The Hobbit was released Dec. 14, most of the revenues will be accounted in the latest earnings report.
Many of the analysts believe that the rise in the private stock is not only because of improved earnings expectations. Many believe that Metro Goldwyn Mayer may come up with a large private placement, which would provide much needed cash for operations and acquisitions.
Anchorage Capital Group LLC is the biggest investor in MGM. Others who have invested in MGM include Highland Capital Management LP, Solus Alternative Asset Management LP and Davidson Kempner Capital Management.
Loeb’s recent moves
Loeb, earlier this week, wrote a letter to Sony Corporation (NYSE:SNE), asking the electronics company to spin off its entertainment division and financial services assets. Loeb, through his Third Point LLC, is the largest shareholder of Sony Corporation (NYSE:SNE) with 6.5 percent stake. After the news of the letter went public, Sony’s stock gained about 10 percent.
Loeb, who grew up in L.A., holds about a 5.3 percent stake in Yahoo! Inc. (NASDAQ:YHOO), and was the key reason for the exit of CEO, Scott Thompson and the appointment of Google Inc (NASDAQ:GOOG)’s Marisa Mayer in place. Loeb’s fund manages about $12.9 billion assets, and he is personally worth about $1.5 billion.
As of now, there are no comments from Loeb, or any information regarding the number of shares he held. Also, a spokesperson from MGM refused to comment on the matter and on anything related to it. MGM’s private stock currently trades for $51 a share.