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    A Decade of Revolution Declare Your Research Independence

Keith bought MGM in the Hedgeye Virtual Portfolio at $13.91.  According to his model, the TRADE support line is $13.52, and the TREND support level for MGM is at $11.68.

MGM is not for the faint of heart.  The stock has been on a tear YTD, rising 35% compared to a 8% gain in the S&P.  That’s what a lot of financial and operating leverage will get you in an improving environment.  Much of the investor optimism is attributed to better than expected performance on the Las Vegas Strip in Q4, which was confirmed in yesterday's conference call.  MGM derives over 60% of its EBITDA from the Las Vegas Strip.  While investors have focused on room rates – which have been strong – we think the incremental catalyst is slot volume.  That’s where the leverage is on the margin.  With a high debt levels and a fixed cost operating structure, continued improvement in Strip metrics will have a high flow-through to the bottom line, benefiting results in 2012 and beyond.