What Makes MGM Resorts International (MGM) an Asymmetric Risk-Reward Opportunity?

Meridian Funds, managed by ArrowMark Partners, released its “Meridian Hedged Equity Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. US equity markets rebounded in the quarter, rising 23% from intra-period lows to close at record highs. The fund gained 4.86% (net) in the quarter compared to the S&P 500 Index’s 10.94% return and its secondary benchmark, the CBOE S&P 500 Buy/Write Index’s 1.90% return. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its second-quarter 2025 investor letter, Meridian Hedged Equity Fund highlighted stocks such as MGM Resorts International (NYSE:MGM). MGM Resorts International (NYSE:MGM) is a gaming and entertainment company that owns and operates casino, hotel, and entertainment resorts. The one-month return of MGM Resorts International (NYSE:MGM) was 1.90%, and its shares gained 0.29% of their value over the last 52 weeks. On August 25, 2025, MGM Resorts International (NYSE:MGM) stock closed at $38.12 per share, with a market capitalization of $10.376 billion.

Meridian Hedged Equity Fund stated the following regarding MGM Resorts International (NYSE:MGM) in its second quarter 2025 investor letter:

"MGM Resorts International (NYSE:MGM) is a global gaming and hospitality company with marquee assets on the Las Vegas Strip, Macau exposure, and a growing online presence via BetMGM. Our investment thesis centers on MGM’s ability to generate substantial free cash flow from its mature casino operations while simultaneously building a digital platform that addresses the massive U.S. online gaming opportunity. The stock performed well during the period on better-than expected earnings, driven by outperformance across all business segments. The highlight was BetMGM reaching profitability for the first time, generating positive EBITDA. The company has repurchased over $700 million in shares and authorized an additional $2 billion for share buybacks, demonstrating its commitment to capital returns. The combination of operational momentum, digital inflection, and aggressive capital returns at a discounted valuation reinforced our conviction that MGM is an asymmetric risk reward opportunity."

MGM Resorts International (NYSE:MGM) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 58 hedge fund portfolios held MGM Resorts International (NYSE:MGM) at the end of the second quarter, which was 52 in the previous quarter. While we acknowledge the potential of MGM Resorts International (NYSE:MGM) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered MGM Resorts International (NYSE:MGM) and shared Longleaf Partners Fund's views on the company. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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