Shares of William Penn Entertainment (NASDAQ: PENN) jumped 2.41% today on volume that was 55.7% in a higher place the daily ordinary after David Einhorn disclosed that his Greenlight Washington took a “medium sized” post inwards the regional casino manipulator inwards the first-class honours degree quarter.
In a letter to the duck fund’s clients, Einhorn said Greenlight constituted a view inwards Penn at an intermediate terms of $22.69 — substantially in a higher place the stock’s closure terms of $17.84. The shares are cancelled 24% over the yesteryear 90 days and 31.44% year-to-date, making William Penn single of the worst-performing gaming equities o'er those periods. Einhorn argued markets are assigning electronegative to Penn’s ESPN Bet unit, but he sees potential inward that segment.
It’s reasonable to say that after the Barstool fiasco, investors experience serious doubts near the company’s strategy and management’s competence to execute,” Einhorn wrote in the letter. “Were the market place to course credit PENN with but 15% of DraftKings’ value, the segment solo would follow worth $20 a share.”
On Monday, Penn proclaimed the hiring of former Walt Walt Disney (NYSE: DIS) executive Henry Louis Aaron LaBerge as chief engineering ship's officer (CTO) — a make a motion that could long pillow the interactive division, including ESPN Bet. ESPN Bet debuted finally November.
Einhorn Sees Value in Penn Land-Based Casinos
Since William Penn took a now eliminated post inward Barstool Sports in Jan 2020, many securities industry participants make viewed the operator as an online gaming play spell ignoring its brick-and-mortar regional casinos.
That shouldn’t live the case. While the brief man and wife with Barstool Sports and recent set in motion of ESPN Bet are newspaper headline generators and the latter could live stuff to the long-term William Penn investment funds thesis, the realism is the accompany generates the mass of its earnings and revenue from land-based casinos. Einhorn believes markets aren’t assigning adequate note value to that position of the business.
“PENN’s electric current enterprisingness note value is simply o'er $4.3 billion, and based on 8-12x multiple of loose cash in flow, we precious their land-based casinos between $4.3 1000000000000 and $7 billion,” wrote the Greenlight founder.
Even at $4.3 billion, the low-pitched terminal of the set out mentioned above, that’s a substantial premium to Penn’s electric current securities industry capitalisation of $2.53 billion.
Einhorn’s Greenlight No Stranger to Gaming Stocks
Einhorn’s Greenlight joins HG Vora as the well-known put off cash in hand that have got late taken stakes inward Penn. Last December, HG Vora said it took an interest group of 18.5% of Penn’s shares owing(p) and demanded table seats inwards an effort to crowd for change at the gaming company.
For its part, Greenlight is also intimate with gaming equities, having antecedently held numerous positions crossways the industry, including inward firms born come out of blank-check deals, including Genius Sports (NYSE: GENI) and Playstudios (NASDAQ:MYPS). There was also speculation that a myopic place inwards DraftKings (NASDAQ: DKNG) may experience been among the contributors to the hedge fund’s impressive 2022 performance.
Einhorn himself is an established poker game player. In 2012, he finished thirdly inward the World Series of Poker, winning $4.35 zillion inward the process.
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