Crazy Jim Paulson's MGM Mirage (MGM) Position

In his latest 13 F, Paulson discloses a huge stake in MGM shares. The problem with 13 F disclosures is that they don't show equity short or credit derivative positions, so it can be hard to tell what someone is really doing.

A Zero Hedge commenter speculates that Paulson is not dumb/bullish enough to be buying MGM outright and that this is part of a capital structure arbitrage:

FWIW, that 40mm shares of MGM looks very interesting to me...quick and simple beta between MGM stock and CDS during 3-6 months Q4 09-Q1 10 and you see 120x ish...With CDS trading at ~800bps, that's a DV01 around say $3300 / $10mm notional (again give or take)...so I suggest (ever so humbly) that Mr. Paulson has bought $1bn notional credit protection (short credit)  [Math:- 40mm shares / 120x = 333,333. Then to get to that DV01 we need 100x$10mm or $1bn notional protection] - arb guys, ignore the crude math for now. So he buys 40mm MGM shares and Buys $1bn Credit protection to be 'approximately instantaneously empirically (lots of caveats) MtM hedged.
BUT...a quick optical at the charts of MGM CDS vs Stock and you see CDS got pretty rich (tight) relative to stocks during that quarter as all the craziness of reach-for-yield (and its own fundamentals played in) and so while he is 'hedged', he is looking to take advantage of the potential mispricing....
AND...even better, should MGM go tits-up - and we have to assume recovery is gonna be ugly, he gets paid say $700mm (30% recovery) on the CDS and loses say $480mm (or whatever he paid for it, which is likely less)...
SO..instead of being a fully bullish bet on MGM (he is huge long MGM stock and it will do the rounds on StockTwits tomorrow), he is actually hoping for a huge bearish ending [DEFAULT] and in the meantime, showing his huge Stock holding in MGM gets the momo boys and coat-tail hanger-onners to pull his arb into a nice PnL position in the meantime (coz technical buying pressure in stocks will outweigh any supply of protection in CDS)...