Hedge fund manager Keith Meister explains why MGM is undervalued, moves stock higher

Published Wed, Feb 10 20212:43 PM EST

Jesse Pound @/in/jesse-pound @jesserpound

A high profile hedge fund manager told CNBC on Wednesday that the booming sports gaming industry could help the market overlook the pandemic's hit to one of the world's most famous casino brands. Keith Meister, managing partner and CIO of Corvex Capital and a board member of MGM Resorts , explained on CNBC's " Halftime Report " why he is bullish on the company. MGM will report its latest quarterly results after the bell on Wednesday. "I think most of the focus when they report earnings will be on their growing sports betting and online business. I am massively bullish on the potential opportunity for BetMGM, which is our U.S. sports betting and iGaming business," Meister told CNBC's Scott Wapner. Meister, who previously worked under legendary activist investor Carl Icahn, said that BetMGM is "a misvalued asset inside MGM" Shares of MGM rose to a session high of $36.70 per share shortly after Meister made his comments. The stock last traded up about 2% for the session. Sports gambling and online gaming in general have become a new frontier for investors over the past year, with several states legalizing online and sports betting in part to help fill revenue shortfalls created by the pandemic. Shares of DraftKings , a more pure-play sports betting stock, are up roughly 300% over the past 12 months. To be sure, there is disagreement over how large the total market for sports gambling will be in the U.S. and how quickly legalization will spread across the country. Texas Lt. Gov. Dan Patrick told a local radio station on Tuesday that sports gambling was unlikely to pass in one of the largest states this year. Still, Meister said that the growth in sports and online betting, combined with recent cost cuts, has MGM set up well for the future. "At some point the economy is going to reopen, MGM will going to be a better company for the lessons they've learned, and we have this massively powerful platform in sports betting which I think is one of the few white space growth opportunities in the world," Meister said. Watch the full interview above.

Keith Meister

Adam Jeffery | CNBC

A high profile hedge fund manager told CNBC on Wednesday that the booming sports gaming industry could help the market overlook the pandemic's hit to one of the world's most famous casino brands.

Keith Meister, managing partner and CIO of Corvex Capital and a board member of MGM Resorts, explained on CNBC's "Halftime Report" why he is bullish on the company. MGM will report its latest quarterly results after the bell on Wednesday.