David Einhorn's Greenlight Capital Takes Stake in Undisclosed Gambling Company

David Einhorn's Greenlight Capital has acquired a stake in an undisclosed gambling company and Penn Entertainment, betting on the potential growth of the sports betting industry. Despite Penn's recent stock decline, Einhorn remains optimistic about the company's sports betting and land-based casino segments.

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Wojciech Zylm
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David Einhorn's Greenlight Capital Takes Stake in Undisclosed Gambling Company

David Einhorn's Greenlight Capital Takes Stake in Undisclosed Gambling Company

David Einhorn's Greenlight Capital has acquired a stake in an undisclosed gambling company, along with other new investments in the first quarter of 2024. The hedge fund established a medium-sized position in Penn Entertainment at an average cost of $22.69 per share, though the stock has since declined to $17.44.

Despite the recent decline in Penn's stock price, Einhorn remains optimistic about the potential of sports betting to boost the company's value. He argues that if Penn's ESPN Bet unit were valued at just 15% of DraftKings' worth, the sports betting segment alone could be worth $20 per share. Greenlight also valued Penn's land-based casinos between $4.3 billion and $7 billion, based on an 8-12x multiple of free cash flow, while the company's current enterprise value is just over $4.3 billion.

Einhorn noted that after the "Barstool fiasco", investors have serious doubts about Penn's strategy and management's competence to execute. The stock has underperformed the gaming sector, falling 24% over the past 90 days and 31.44% year-to-date.

Why this matters: Einhorn's investment in Penn Entertainment and the undisclosed gambling company highlights the growing interest in the sports betting industry among major investors. The potential for significant growth in this sector could have broader implications for the gaming industry and the economy as a whole.

Greenlight Capital's other first-quarter investments include a stake in HP, which Einhorn believes will benefit from the AI sector, as well as positions in Roivant Sciences and Liberty Global. Einhorn's investment strategy during the volatile market included a temporary halt in acquiring new stock positions in the fourth quarter of 2023, but he has since resumed a more aggressive approach in the first quarter of 2024.

Einhorn himself is no stranger to the gaming industry, having previously held positions in other gaming companies. He is also an accomplished poker player, finishing third in the World Series of Poker in 2012. Despite the challenges faced by Penn Entertainment, Einhorn's investment suggests he sees potential in the company's sports betting segment and land-based casinos.

Key Takeaways

  • Greenlight Capital acquired stake in undisclosed gambling company, Penn Entertainment
  • Einhorn optimistic about Penn's sports betting unit, values casinos at $4.3-$7B
  • Penn stock underperformed, down 24% in 90 days, 31.44% YTD
  • Greenlight also invested in HP, Roivant Sciences, Liberty Global in Q1 2024
  • Einhorn, an accomplished poker player, sees potential in Penn's sports betting