HG Vora, a hedge fund with a monitor file of investing in on line casino equities, has constructed an 18.5% stake in Penn Leisure (NASDAQ: PENN) and is requesting that the gaming firm grant it board seats.
A picture for Penn Leisure. Hedge fund HG Vora introduced an 18.5% within the inventory. (Picture: Penn Leisure)
In a brand new 13D submitting with the Securities and Change Fee (SEC), the cash supervisor revealed the place within the area on line casino operator, which incorporates frequent inventory and derivatives. Although it didn’t reveal what number of administrators slots it desires, HG Vora did chide Penn for its lagging inventory value. The hedge fund beforehand held shares of Penn in 2018.
Given the persistent underperformance of the Widespread Inventory and the Issuer’s capital allocation monitor file, amongst different areas of concern, the Reporting Individuals have requested that the Issuer afford them the fitting to designate extremely certified administrators who could be dedicated to working with the Issuer’s administration and fellow Board members to assist the Issuer understand its full potential,” mentioned the cash supervisor within the submitting.
Shares of Penn jumped 7.48% in early buying and selling on the information, including to a acquire of practically 16% over the previous 90 days — a transfer fueled largely by the sturdy debut of the ESPN Guess sports activities wagering cellular software. Nonetheless, the inventory is down 10% year-to-date, whereas rivals akin to Caesars Leisure (NASDAQ: CZR) and DraftKings (NASDAQ: DKNG) have posted spectacular features.
HG Vora May Push for Change at Penn
HG Vora has the look of an activist investor in Penn. The timing of the hedge fund revealing its stake within the gaming firm comes because the window for the operator to appoint administrators for 2024 begins on Jan. 8, operating via Feb. 7.
Activist traders push for change in a wide range of types. It’s attainable that HG Vora might provoke a proxy battle if Penn doesn’t play ball when it comes to granting it board seats.
The cash supervisor might take actions starting from “with out limitation, proposing adjustments within the Issuer’s operations, proposing adjustments to the Board and the Issuer’s administration group, proposing adjustments to the Issuer’s constitution, bylaws or governance construction, capitalization or dividend coverage, proposing extraordinary company transactions, asset gross sales, soliciting proxies from different stockholders of the Issuer in reference to conferences of stockholder.”
The hedge fund instantly owns 14.5 million shares of Penn fairness, or 9.6% of the shares excellent primarily based on the gaming firm’s shares excellent tally as of Oct. 26. The rest of the stake comes by means of “a cash-settled swap settlement representing financial publicity to a further 13,500,000 shares of the Issuer’s Widespread Inventory” and different cash-settle choices.
Penn Joins Checklist Seeing Activist Motion
To shut 2023, activist traders are rising publicity to gaming equities. Previous to HG Vora revealing its curiosity in Penn, a number of hedge funds piled into Entain (OTC: GMVHF), probably resulting in the departure of former CEO Jette Nygaard-Andersen whereas serving to Eminence Capital founder Ricky Sandler land a board seat on the Coral proprietor.
As for HG Vora, its historical past of gaming investments, which was highlighted in regulatory submitting, is prolonged and largely profitable.
The cash supervisor has beforehand held positions in Boyd Gaming (NYSE: BYD), Caesars, Gamesys, and the predecessor firm of Bally’s (NYSE: BALY).
