HG Vora Acquires Significant Activist Position in Penn Entertainment

Posted on: December 28, 2023, 10:07h. 

Last updated on: December 28, 2023, 10:07h.

HG Vora, a hedge fund with a track record of investing in casino equities, built an 18.5% stake in Penn Entertainment (NASDAQ: PENN) and is requesting that the gaming company grant it board seats.

An image for Penn Entertainment. Hedge fund HG Vora announced an 18.5% in the stock. (Image: Penn Entertainment)

In a new 13D filing with the Securities and Exchange Commission (SEC), HG Vora, the money manager revealed the position in the region casino operator, which includes common stock and derivatives. The hedge fund chided Penn for its lagging stock price.

The Reporting Persons have requested that the Issuer afford them the right to designate highly qualified directors who would be committed to working with the Issuer’s management said the money manager in the filing.

Shares of Penn jumped 7.48% in early trading on the news. The stock is down 10% year-to-date while rivals such as Caesars Entertainment (NASDAQ: CZR) and DraftKings (NASDAQ: DKNG) have posted impressive gains.

HG Vora Could Push for Change at Penn

A window for the operator to nominate directors for 2024 starts on Jan. 8. Activist investors push for change in a variety of forms, and it’s possible that HG Vora could initiate a proxy battle if Penn doesn’t play ball in terms of granting it board seats.

The money manager could take actions ranging from “without limitation, proposing changes in the Issuer’s operations, proposing changes to the Board and the Issuer’s management team,”

The hedge fund directly owns 14.5 million shares of Penn equity, or 9.6% of the shares outstanding based on the gaming company’s shares outstanding tally as of Oct. 26.

Penn Joins List of Gaming Companies Seeing Activist Action

As for HG Vora, its history of gaming investments, which was highlighted in regulatory filing, is lengthy and mostly successful.

The money manager has previously held positions in Boyd Gaming (NYSE: BYD), Caesars, Gamesys, and the predecessor company of Bally’s (NYSE: BALY).

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