Billionaire investor Kenneth Dart has not increased his position in Flutter Entertainment (NYSE: FLUT), but this does not necessarily indicate a negative outlook on the stock.
The Irish Times has reported that it has been around a month since Dart acquired shares of the owner of FanDuel, which marks one of his longest periods of inactivity since his involvement with the gaming stock was disclosed about a year ago.
His initial small stake in the Paddy Power owner has grown to 20% as of April and currently stands at 31.4%. Despite this increase, it is unlikely that Dart has activist intentions with Flutter for several reasons.
Firstly, he does not have a history of activism in the various companies he has invested in. Secondly, The Irish Times points out that over a third of his stake in Flutter is through derivatives and swaps. Since he does not directly own at least 30% of the Flutter common stock, he is not obligated to make an acquisition offer as required under Irish law.
Analyzing Dart’s Move on Flutter Stock
With an estimated worth of $4.1 billion, Dart is known for his secretive approach to investments, making it challenging to interpret his decision to pause on Flutter stock. However, he has not been selling shares of the Betfair owner.
It is possible that Dart’s pause in Flutter activity is due to his involvement in other gaming equities. Recent regulatory filings revealed that he acquired a 5.8% stake in DraftKings (NASDAQ: DKNG), Flutter’s primary competitor in the U.S.
While Dart most likely is not pursuing activism with DraftKings, given the CEO’s majority control, the pause on Flutter coupled with the DraftKings investment could indicate Dart’s interest in diversifying his investments in the gaming sector.
Update on Evolution Situation
Recent reports show that Dart’s stake in Evolution AB has surpassed 30%, prompting him to make a formal acquisition bid for the Swedish gaming company. Despite offering $13.8 billion, Dart clarified that he does not intend to acquire Evolution outright, and the board advised investors to reject the offer.
Only 0.06% of Evolution’s outstanding shares were tendered to Dart, increasing his ownership to 31.6%. When factoring in some swaps, his economic interest in the company amounts to 33.8%.
Under Swedish law, since the offer was declined and the tender period has ended, Dart has one year to increase his stake in Evolution before being mandated to submit another formal takeover proposal.