The Five Dumbest Things on Wall Street This Week

3. Kerkorian's Grand Illusion

Buyout bets aren't paying off at MGM Mirage (MGM Quote).

The casino operator set plans Wednesday to build a new Las Vegas hot spot with South African developer Sol Kerzner. MGM said joining with Kerzner on the "multibillion-dollar integrated resort property" will allow the company to accelerate growth while conserving capital.

"This is an exciting opportunity for our company," said MGM's finance chief, Jim Murren. "This development will further elevate the value of our surrounding land holdings and assets."

That's dandy, because another announcement Wednesday promptly depressed the value of MGM stock. Shares dropped 7% in heavy trading after billionaire investor Kirk Kerkorian, who owns more than half of MGM's stock, called off his plan to split the company up.

MGM shares had soared 38% in the month since Kerkorian announced he wanted MGM's plum Bellagio property all to himself. His investment firm, Tracinda, said in a late May Securities and Exchange Commission filing that a deal could lead to "financial restructuring transactions involving all or a substantial portion of the remainder" of MGM. Wall Street took that remark as meaning the company was up for sale.

But on Wednesday, visions of a big MGM sale vanished. Tracinda said in a filing that it had "determined not to pursue negotiations" over Bellagio because MGM's joint venture strategy offers "significant potential to unlock value."

When it comes to takeover hopes, MGM Mirage definitely lives up to its name.

Dumb-o-Meter score: 88. "We are very gratified by the overwhelming interest in our company that followed Tracinda's initial announcement," MGM said Wednesday.