Conflict Erupts: Vora Launches Proxy Battle Against Penn Entertainment
Published on: May 13, 2025, 6:11 AM. Last updated on: May 14, 2025, 9:51 AM.
Todd Shriber @etfgodfatherRead More Investments, Business, Mergers & Acquisitions Hedge fund takes on casino company in proxy warVora calls for shareholders to elect its directors slateSays Penn destroyed shareholder value
After filing a legal proxy statement against Penn Entertainment (NASDAQ: PENN), HG Vora Capital Management has declared open war on the gaming giant, appealing directly to its shareholders for support.
"This October Surprise is a circus freak show; an embarrassment that only profits the entrenched insiders," wrote Parag Vora, founder of HG Vora, in a scathing letter to Penn investors. "The company's board has shut the backdoor on democracy, hoping their shareholders will fall for the charade."
The hedge fund firm continues to push for three seats on Penn's board, nominating William Clifford, Johnny Hartnett, and Carlos Ruisanchez. However, Penn recently announced that only two director slates will go to the shareholder vote at the June annual meeting. Hartnett and Ruisanchez have been approved, but Clifford was left out, which Vora found "quixotic."
Direct Attacks on Penn's Leadership
Vora called out Penn's CEO Jay Snowden and chairman David Handler for running the company into the ground, citing a laggard stock performance since 2017[1]. The shares closed at $16.16 on Tuesday, a far cry from the $140 they fetched five years earlier.
"PENN's stock has underperformed its gaming peers over the last two, three, four, five, six, seven, eight, nine, and ten years," Vora wrote in the letter, stressing the company's deteriorated worth on Snowden and the independent directors' watch[1].
Echoing concerns voiced by other disgruntled equity owners, Vora questioned the massive investment in the online sports industry, branding the moves unrewarding and ill-advised[1]. Penn splurged over $500 million to acquire Barstool Sports only to abandon the unit in 2023, ceding it back to founder David Portnoy for a measly $1[1].
In a tone reminiscent of a battle cry, Vora asserts, "we're not asking you for a fight, we're inviting you. Your voice matters. Join us. Win at PENN."
The hedge fund launched www.WinAtPENN.com, a website dedicated to informing shareholders about the shortcomings of Penn's leadership while showcasing the "Gold" proxy card, their board candidates' slate.
The Board's Alleged Fiduciary Breach
The hedge fund alleged that Penn's decision to cut the number of board seats available at the annual meeting is a clear breach of its fiduciary duties[1]. It also claims that this "brazen act of entrenchment" deprives shareholders of their right to elect directors of their choosing.
HG Vora has filed a legal complaint against Penn in the U.S. District Court for the Eastern District of Pennsylvania over the matter. Meanwhile, Penn accused HG Vora of violating Pennsylvania's gaming laws in a counterattack[5].
The Importance of Clifford to the Struggle
Although Penn's decision to include Hartnett and Ruisanchez in the board race is a step in the right direction, HG Vora insists that William Clifford, with his vast experience in capital allocation and mergers and acquisitions, is an essential piece of the puzzle[1]. Clifford was previously associated with Pinnacle Entertainment, a company acquired by Penn seven years ago. During Clifford's tenure, Pinnacle's stock nearly doubled the average performance of other gaming peers[1].
Vora concludes, "the board doesn't want Clifford in the boardroom to scrutinize their dealmaking or question their strategy or leadership—even though that's exactly what's needed."
Insight: During Clifford's tenure at Pinnacle Entertainment, a regional casino operator, stock performance was nearly double that of other gaming peers. This strengthens HG Vora's argument for Clifford's inclusion in Penn's board.
- The ongoing proxy war between HG Vora Capital Management and Penn Entertainment has extended to the financial sphere, with Vora arguing that the commercial gaming company's investments in the online sports industry, particularly the acquisition of Barstool Sports, have been financially unwise and detrimental to shareholders.
- Despite Penn Entertainment's recent announcement that only two director slates will go to the shareholder vote at the June annual meeting, HG Vora continues to advocate for the inclusion of experienced businessman William Clifford, arguing that his expertise in capital allocation and mergers and acquisitions is critical to democratizing Penn's board and improving its financial performance.
- The battle for control of Penn Entertainment's board has underscored the importance of investing wisely and considerately, as the finance and business sectors closely watch the unfolding events to gauge the impact on the broader commercial gaming industry.