Penn Entertainment saw the company’s share rise by as much as 7% last week, as news transpired that HG Vora Capital Management, a hedge fund, had bought enough shares to push its total stake in the gaming and entertainment company to 18.5% of the total stock.

HG Vora Capital Management Determined to Appoint Right Candidates

The news was originally reported by Wall Street Journals, and this development comes at a time when investors are seeing heightened interest in gaming stocks which have been improving over the last several months and promising to remain resilient in the new year.

HG Vora Capital Management is also looking to assume board seats as it hopes to tighten control over the company and ensure that it steers it towards profitability. With Penn Entertainment now serving as the technological provider for the recently launched ESPN Bet, optimism is riding high.

HG Vora Capital is also run by a former Goldman Sachs banker, Parag Vora, who has long been keeping his hand on the gaming industry’s pulse and looking to further his presence in it. Yet, the bigger news here is that Vora is not going to relent until the fund has assumed board seats and is willing to challenge any refusal during Penn’s annual meetings that will begin on January 8, 2024, and run through February 7, 2024, according to reporting done by Wall Street Journal.

Essentially, HG Vora says that it has the means to handpick highly qualified directors who can help sort out what has been described as the “underperformance” of Penn’s Common Stock in a filing to the US Securities and Exchange Commission. As a reminder, Penn formerly used to be on the S&P 500’s index.

Bullish on the Outlook of Penn’s Stock in 2024

Analysts in the meantime remain bullish on Penn Entertainment’s stock and other gaming giants for that matter. A note sent to investors by Brandt Montour, an analyst at Barclays, claims that PENN Entertainment remains his favorite stock for the entire year, citing the successful launch of ESPN Bet.

Of course, this prediction, although reassuring, needs to be taken with a grain of salt as challenges may yet present themselves when looking into making good on any investment in the sector. Whether Montour’s prognostication is correct will probably depend on how Penn handles its internal affairs over the coming weeks. A boost to the common stock is already on the way – will it hold?

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Activist investor HG Vora Capital Management has announced its stake in the gambling group 888, following the recent disclosure by a group of former executives from rival bookmaker GVC, currently rebranded as Entain. Financial Times reported that the New York-based fund revealed that it holds a 5.5% stake in 888, with shares owned directly by the fund and its head, Parag Vora. 

Consortium of Former Entain Executives Sparks Potential Shake-Up of 888

The emergence of both HG Vora and FS Gaming Investments, the consortium of former Entain executives, has set the stage for a potential shake-up of 888. The company’s stock price has struggled over the past year due to compliance issues and rising interest rates, which negatively impacted its £1.95 billion ($2.5 billion) debt-fueled deal to acquire William Hill.

Earlier this year, 888’s CEO, Itai Pazner, was dismissed when the board announced that £50 million ($63.3 million) of customer accounts had been frozen due to anti-money laundering failures. The accounts have since been reinstated. With the company currently being led on an interim basis by Chairman Lord Jon Mendelsohn, 888 is actively searching for a new CEO. 

FS Gaming Investments is not only advocating for a board seat but has also suggested that Kenny Alexander and Stephen Morana, both former Entain executives, could potentially lead the company.

HG Vora Capital Management supports the efforts to bring in a new management team at 888, with Alexander as the potential leader. 

HG Vora Capital Management’s Gambling Industry Investments

HG Vora Capital Management has a history of involvement in the gambling industry, having previously invested in US operators Penn National Gaming and Pinnacle Entertainment before their merger in 2018. It also disclosed a 5% stake in William Hill shortly before its acquisition by Caesars Entertainment in 2020.

At the same time, insiders suggest that FS Gaming Investments’ main focus is on achieving a faster integration between 888 and William Hill to reduce costs and address the group’s £1.6 billion ($2 billion) debt. The consortium includes Lee Feldman, the former chair of GVC, investment bank B Riley Financial, and its investment chief Daniel Shribman. GVC acquired Ladbrokes in 2017 and has since rebranded as Entain.

Despite the challenges faced by 888, the company’s board remains confident in its long-term strategy to create value for shareholders. The company is committed to updating and engaging with all shareholders as it continues to focus on its strategic and operational priorities.

Just this week 888 Holdings completed the sale of its Latvian assets to Paf for €28.3 million ($30.6 million), allowing 888 to streamline operations and concentrate on strategic growth while Paf expands its presence in the Latvian market and solidifies its position in the region.

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