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

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Baron Funds, an asset management firm, published its “Baron Real Estate Fund” first quarter 2022 investor letter – a copy of which can be downloaded here. The Baron Real Estate Fund (the “Fund”) declined 10.76% (Institutional Shares) in the first quarter of 2022, modestly outperforming its primary benchmark, the MSCI USA IMI Extended Real Estate Index (the “MSCI Real Estate Index”), which declined 11.03%. The Fund underperformed the MSCI US REIT Index (the “REIT Index”), which declined 4.28%. Try to spend some time looking at the fund’s top 5 holdings to be informed about their best picks for 2022.

In its Q1 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 $13.2 billion market capitalization. MGM Resorts International (NYSE:MGM) delivered a -30.68% return since the beginning of the year, while its 12-month returns are down by -26.30%. The stock closed at $31.11 per share on May 24, 2022.

Here is what Baron Real Estate Fund has to say about MGM Resorts International (NYSE:MGM) in its Q1 2022 investor letter:

"At this stage, we believe several public real estate companies offer compelling long-term return prospects that, in some cases, may include a trifecta combination of growth, dividends, and an improvement in valuation. Examples of public real estate companies that are attractively valued includes: MGM Resorts International. Leading global casino and entertainment company. At its recent price of $40 per share, we believe the company is valued at a significant discount to our reasonable $60 per share estimate of the sum-of-the-parts value of its business."

MGM Grand, Las Vegas
MGM Grand, Las Vegas


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 59 hedge fund portfolios at the end of the first quarter of 2022, compared to 55 funds in the previous quarter. MGM Resorts International (NYSE:MGM) delivered a -28.04% return in the past 3 months.

In March 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 Q1 page.

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