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Gaming Officials Selling Shares

LAS VEGAS -- More than two dozen gaming industry insiders, company officers and directors, have sold about 10 million shares of their own companies for almost $300 million since May, filings with the U.S. Securities and Exchange Commission show. About two-thirds of the total was sold by Mandalay Resort Group Chairman Mike Ensign and Vice Chairman Bill Richardson who "sold a staggering 6.4 million shares combined, (more than) half of all (their personal) stock holdings as well as some options since mid-June following the company's quarterly earnings and dividend announcement," Deutsche Bank analyst Marc Falcone said.

Ensign and Richardson each sold approximately 3.2 million shares for $103 million and $106 million, respectively. The sales also reduced the executives' holdings in the company by more than half to 2.5 million shares each.

Mandalay officials could not be reached for comment.

Bernie DeLury, Park Place Entertainment Corp. general counsel, was the only company officer to buy stock, picking up 422 shares. Five directors of Harrah's Entertainment also picked up a total of 1,400 shares.

Wall Street analysts and company officials say the broad sell-off is the result of rising stock prices and rules governing insider transactions rather than plunging confidence in the industry.

Over the last 90 days, the performance of major gaming stocks has improved 14 percent, compared with a 4 percent gain for the S&P 500 over the same period, Deutsche Bank data show.

"We would attribute the spate of recent sales to a strong run in this group of stocks, which have come way off their 52-week lows," Falcone said.

"Insiders have a relatively short window for selling shares, in our view, generally right after a quarter is reported and not far enough into the next quarter for investors to read too much into the sales. As such, it is not uncommon to see insider transactions hit the tape following quarterly reports," Falcone said.

Joe Greff, gaming analyst at Fulcrum Global Partners, agreed.

"Also motivating management teams is the fact that these stocks are trading at much higher levels than say six months ago. That's really it," Greff said.

Six insiders at International Game Technology have sold approximately 960,000 shares for $27.9 million since that company reported earnings in July. Some 600,000 shares were sold by company President Tom Baker for $15.8 million.

Company spokesman Ed Rogich, explaining the sales activity, said generally the window for insider transactions is limited. In the case of each specific transaction, they represent a small proportion of an individual's holdings, Rogich said.

While insiders at Harrah's Entertainment have not sold any shares since the company reported quarterly earnings, five insiders sold roughly 552,000 shares for $22.4 million between mid-May and mid-June following its quarterly earnings report.

Harrah's Entertainment Chairman Phil Satre, who sold 327,000 shares for $13.1 million, said it has been his intention to diversify his portfolio since stepping down as chief executive officer in January.

Overall, Harrah's spokesman David Strow said stock awards are part of the company's executive compensation program and "from time to time they will sell stock to realize value. Nothing further should be inferred from the sales."

Altogether, eight insiders at Station Casinos have sold roughly 805,000 shares since it reported earnings in July, led by Chairman Frank Fertitta who sold 347,0000 for about $10.1 million.

Station Chief Financial Officer Glenn Christenson said "both Frank and (Station President) Lorenzo (Fertitta) will from time to time tap into their holdings to realize value."

At MGM Mirage, three insiders have jettisoned 166,200 shares since July 25 for $6.4 million, led by Chairman Terry Lanni who sold 300,000 shares for $4.3 million since May.

An MGM Mirage spokesman said the company does not comment on the personal transactions of company officers or employees.

Park Place has only had one insider sale for 50,000 shares over the past few months.

Park Place spokesman Robert Stewart said, "From time to time, officers and directors decide within legal time frames to buy and sell stock, and we consider that their business."

MGM Mirage, Harrah's Entertainment, Park Place Entertainment Corp. and Mandalay Resort Group generally are trading 40 percent to 50 percent above their 52-week lows. Station Casinos is trading 160 percent above its 52-week low, and IGT is trading almost 80 percent above its low, Falcone said.

"Our sense is that most of this selling has been into good news (or following good news) as opposed to top ticking or a negative indication, although we do acknowledge that gaming insiders have typically been good traders of their own stocks over the years, in our view," Falcone said.

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