888 Holdings (LON: 888) (OTCPK: EIHDF) shares are up 21% in London on the back of some stake building by gambling industry veterans. The real proof here being that everything has its price, even a risk. Something that is not a good deal, not a risk worth taking, at one price can be an eminently sensible one to take at a different - usually lower - price. Which is, in effect, what we are seeing here.
The specific news is that a 6.5% stake in 888 Holdings has been built by an investor group. More details on that group: “An investment vehicle backed by a host of former board directors of gambling group GVC, including onetime chief executive Kenny Alexander, has taken a 6.5 per cent stake in William Hill owner 888, spotting an opportunity in the bookmaker's low share price. FS Gaming Investments has also received the backing of GVC's former chair Lee Feldman and Shay Segev, Alexander's successor who oversaw GVC's takeover of Ladbrokes and the creation of Entain. Segev, who now runs streaming service DAZN, ceded his voting rights to the group.”
This is not news that 888 is definitely worth more - these are gambling industry veterans after all. Rather, that the price of 888 makes this a good bet.
888 Holdings share price from London Stock Exchange
The reason for the share price jump this morning is that the news of this stake only arrived at the end of the trading day yesterday.
The speculation (hey, this is gambling on a gambling stock!) is as to whether this is a purely passive investment or whether there will be some activism as well: “ Insiders familiar with the matter revealed that the consortium has already approached 888 with proposals to enhance the company's value. These proposals may include changes in leadership and strategy.”
Not that “insiders reveal” is properly understood as “chatter in the marketplace says” and is not to be taken as Gospel Truth. On the other hand it would be odd if such seasoned veterans of the industry were not looking to leverage their knowledge and their stake.
Which then gives us this: “Over the past 12 months, the company's shares have faced a drop of about 63% in London trading.” There have been management missteps recently and it is possible that some to much of that value can be regained by a change in staff and strategy. Only time will tell, obviously.
