MGM, Casino Stocks Win Big

Updated from 11:46 a.m. EDT

MGM Mirage(MGM - Cramer's Take - Stockpickr) surged 26% Tuesday after billionaire Kirk Kerkorian announced that he wants to buy two of the casino operator's key assets -- and potentially cause a bigger shake-up at the company.

The move marks a big bet on the Las Vegas market, and no matter what the resolution, likely would be a winning situation for MGM shareholders.

Other casino stocks also took flight Tuesday, as investors flocked to a sector that that has been unjustly beaten down over the past month.

Kerkorian's investment fund, Tracinda Corp., owns about 56% of MGM's stock. In a Securities and Exchange Commission filing Monday, Tracinda said it wants to enter negotiations to buy the company's Bellagio and City Center properties in Las Vegas.

Tracinda also wants to pursue strategic alternatives with respect to its investment in the company. The move may include "financial restructuring transactions involving all or a substantial portion of the remainder of the company," the filing said.

MGM said it would begin its review of Tracinda's proposal after the company's annual meeting of shareholders Tuesday.

While the language of the filing was vague about Kerkorian's plans for MGM, he likely is looking to take advantage of surging Las Vegas land prices that have left properties on the Las Vegas Strip undervalued in the public markets.

"I think the company is for sale. I think this is how Kerkorian is going to unlock value," says Joe Fath, an analyst with T. Rowe Price, an MGM shareholder.

To see what RealMoney's Frank Curzio had to say about the three possible outcomes of these negotiations, click here.