Updated: Sep 2, 2020
What Howard Rudzki Says:
Undervalued strategy to add value and enter a huge growth market
you take a 12 stake in the open market 00:02 uh 00:03 you are focused on trying to get mgm to 00:06 focus more on the opportunity in online 00:08 gaming 00:09 you know if i put another name on this 00:10 letter 00:12 elliott or any other it would read like 00:14 an activist letter is that how you're 00:15 viewing yourself from this 00:17 no not even remotely and and even the 00:20 the first sentence we're not trying to 00:22 get them to focus more on anything i 00:23 think they're doing a wonderful job 00:25 focusing 00:25 on online gaming they're trying to focus 00:27 more on online gaming which is why we're 00:29 excited about it 00:30 we think the the bill hornbuckle is 00:34 a great leader he's got the right vision 00:36 for the company we think 00:38 uh the board is doing a great job uh 00:41 pushing into this huge opportunity in in 00:44 digital and that's why we're excited to 00:46 get involved did you talk to the board 00:48 into management before you started to 00:49 accumulate stock 00:51 we we told them all along what we were 00:53 doing 00:54 you told them all along what you're 00:56 doing so what is it you're doing 00:58 uh we really like the company we really 01:01 like the opportunity we like the 01:02 the size of the market when we talk 01:04 about um 01:06 iac's history and the things that have 01:08 worked out well for us this offline to 01:10 online transition has been 01:12 a huge theme and we look for very large 01:15 markets and we look for 01:16 players who have we think a fundamental 01:18 advantage in very large markets that are 01:20 undergoing this kind of transformation 01:22 mgm is in i think seven states right now 01:26 going to 11 by the end of the year they 01:29 are uh 01:31 with licenses or whatever the the proper 01:33 term is to get to 01:34 19 states which is i think ahead of 01:36 everybody else as it relates to 01:38 getting that step forward and uh 01:41 they're executing here they're investing 01:43 real money here and 01:45 we believe that that the winning 01:48 formula in this area of digital gaming 01:51 is actually the full picture of offline 01:53 to online 01:54 when you say you can offer the consumer 01:56 the the full experience of what it means 01:58 to 01:59 come into a venue and to be entertained 02:02 in that venue 02:03 and then stick with that customer 02:04 digitally when they're at home 02:07 when they're on the go we look at that 02:09 as a 02:10 as a really exciting customer 02:13 relationship 02:14 and and again a very large market right 02:16 and something you guys know a lot about 02:18 in your letter you say you'll be a 02:19 minority investor but given the size of 02:21 our financial commitment we'd welcome 02:22 the opportunity to contribute to mgm 02:24 success 02:25 in a number in any number of areas 02:28 what does that mean do you want to be on 02:30 the board is this a long-term 02:31 relationship how do you see this 02:33 evolving 02:34 we'd be happy to help wherever they want 02:36 us to help i think that's really 02:38 what what we're suggesting that if if 02:41 they want us on the board which they 02:43 they said they did we'd certainly 02:44 welcome that uh we 02:46 we anywhere we can help we want to help 02:49 joey 02:50 that's what we think about his 02:51 partnership joey was that conversation 02:53 part of uh the discussion surrounding 02:56 acquiring the stake and if so i'm 02:57 curious 02:58 you know how come you went to the open 02:59 market and purchased shares at you know 03:01 19 03:03 per share cost basis uh you know if 03:05 those conversations were happening 03:07 i'm curious if there wasn't discussion 03:09 surrounding you know maybe getting some 03:10 sort of a better deal considering you're 03:12 putting a billion dollars in this 03:13 company 03:14 the amazing thing about mgm is they 03:16 don't need capital right now they 03:18 did some very very smart moves 03:21 uh i mean technically very smart timing 03:25 wise 03:25 lucky in in the sense no one saw the 03:27 pandemic coming but 03:29 but they had the right strategy going in 03:31 which was to 03:32 be well capitalized be over capitalized 03:34 they have i think 03:35 at the current level something like 4.8 03:38 somewhere four or five billion dollars 03:39 of cash 03:40 and so they they have the capital to to 03:44 get through this obviously vegas right 03:46 now is 03:47 certainly very very far from its peak 03:50 potential 03:51 but they have the capital to ride that 03:53 storm out 03:54 all right so you view this you say as a 03:56 long-term uh 03:58 along with a long-term view but you also 04:00 say even if we never advance our 04:02 involvement from here the value was too 04:04 compelling to ignore what do you mean by 04:05 that 04:06 think about the same thing we see at iac 04:09 where 04:10 up until recently we have two public 04:12 subsidiaries if you added up the value 04:14 of the publicly traded securities in our 04:16 two public subsidiaries 04:18 and the cash that we had in our balance 04:19 sheet many times that exceeded our total 04:22 market value 04:23 and mgm is actually quite similar in 04:25 that they have two public subsidiaries 04:27 which they own 04:28 liquid securities in and uh they have a 04:31 cash balance they actually have debt 04:33 also uh we don't normally have as much 04:36 debt as they do but they 04:37 they have uh cash dwell and if you add 04:41 all that up 04:42 you get to now a 04:45 i guess stock's gone up today but 04:47 basically at the time that we were 04:48 buying 04:49 you get the domestic business which is a 04:51 huge cash flow business effectively for 04:53 free 04:53 and that we see is a really good 04:55 opportunity
Joey Levin is an American businessman, currently serving as the CEO of IAC. Levin was appointed to the position in June 2015, after previously leading the company's Search & Applications segment.