Todd Shriber's Take: Penn Shares and the Proxy War
Investor Einhorn boosts holdings in Penn Entertainment amid board dispute
Last update: May 16, 2025, 09:10h.
Todd Shriber @etfgodfather Read More
Financial* Gaming Business* Mergers and Acquisitions* DME Capital ups Penn stake amid hedge fund proxy battle
In the first quarter, David Einhorn's DME Capital Management boosted its investments in Penn Entertainment (NASDAQ: PENN), as another hedge fund prepares for a proxy war against the regional casino operator.
Recent SEC filings reveal that DME Capital gave Penn its second increase in stake, now owning approximately 6.27 million shares. The hedge fund completed its initial investment in Penn during the first quarter of 2024, suggesting this isn't a new, opportunistic move.
The continuing investment in Penn marks a relatively lonely position for DME Capital in their portfolio, with gaming stocks being scarce. The firm is recognized for its extensive experience in gaming equity investments, employing both long and short positions strategically.
The Coinciding Stance: Penn vs HG Vora
A letter penned by Penn's board of directors to investors hours before the DME CapitalSEC filing was met with allegations against HG Vora, the aggressive hedge fund threatening a proxy war against the gaming company.
In the letter, Penn's board accused HG Vora of circumventing gaming laws to snag board seats and planning a debt-fueled buyback plan requiring questionable financial engineering. HG Vora also proposed drafting a strategic review to ease the company's potential sale.
As the confrontations between Penn and HG Vora intensify, the annual meeting is set for next month, where shareholders will cast ballots for either the board proposed by Penn or the "Gold Card" option put forth by HG Vora.
While Easter eggs of DME Capital's stance on the issue have yet to be uncovered, their further investment in Penn does suggest their confidence in the company's future amid this upheaval.
DME has managed to cut the average price of its Penn shares through the added investment amid the stock's price drop. With a current average purchase price of $22.69, it's likely the figure has dipped significantly, given the stock trading at $15.81 on Thursday.
Other Noteworthy Investments
Cheeky moves within the gaming stocks ecosystem were also seen in other firms' 13F filings.
Stanley Druckenmiller's Duquesne Family Office, for instance, increased its stake in FanDuel parent Flutter Entertainment (NYSE: FLUT) in the first quarter to 377K shares from just 18,100 in the previous quarter.
Moreover, 3G Capital decreased its DraftKings (NASDAQ: DKNG) stake in the first three months of 2025. Notably, political news also surfaced in today's batch of 13F filings.
Soros Fund Management initiated a new investment in Las Vegas Sands (NYSE: LVS) in the March quarter. Investor George Soros and his family are well-known supporters of Democratic candidates and parties, while Sands' primary shareholder, Dr. Miriam Adelson, supports Republican candidates and President Trump.
The intricate web of hedge fund investments, proxy wars, and political alliances makes for a thrilling financial watch, leaving us vigilant for any additional developments in the gaming industry.
Insights:
- Proxy War Details: The proxy war between HG Vora and Penn Entertainment focuses on HG Vora's efforts to influence Penn's leadership and strategic direction, with HG Vora pushing for changes they believe would increase shareholder value[1][2].
- Fund Connections: Between the prominent Democratic supporter George Soros, whose fund invested in Las Vegas Sands, and the significant Republican donor Dr. Miriam Adelson, who is a major investor in Las Vegas Sands, there's an interesting interplay of political affiliations[4].
- Industry Scrutiny: The ongoing proxy war and the involvement of powerful hedge funds may draw increased attention to the gaming industry, raising awareness about governance issues and strategic concerns[5].
In the bustling world of financial investments, one might find famous poker players like David Einhorn of DME Capital Management participating, much like high-stakes gamblers at a poker table. DME Capital's ongoing investment in Penn Entertainment, despite the company's ongoing proxy war, suggests that they view the situation as a lucrative opportunity in the market. Proxy wars in the gaming industry, such as the one between Penn and HG Vora, resemble high-value pots in poker, where the outcome can drastically impact the financial landscape and the balance of power among players. This extensively covered battle, marked by political connections, raises questions about the role of finance, investing, and business in governing the gaming industry.
