NYX Gaming Group Ltd (NYX.V)

The whole sector has been trounced. Now everyone hates all of them. Out of the management teams he thinks this is the best. The sector has been out of favour.

It is basically going sideways within a big range. It has its own story and business model so he does not have a strong recommendation. Nothing jumps out at him.

(Market Call Minute.) Made a big acquisition of OpenBet and financed it. It really has changed the company, but is going to take 9 months for that to be in the pudding. It looks pretty good.

Views this as a conservative way to play online gaming. Unfortunately, they have been dragged down along with some of the major players. They are coming out with results on the 27^th, and he is hoping results are decent. Was disappointed with their acquisition. The share price reflected that, being down 20% since it was announced. However, the acquisition is going to grow the business substantially and will help get the stock into the institutional space.

Thinks the overhang from both Amaya Gaming (AYA-T) and Intertain (IT-T) are affecting the price. There have been a lot of headwinds blowing in the face of both those. NYX was spun out of Amaya. He participated in their new issue at $2.75. Management has done an excellent job of hitting all the milestones they said they would. There should be some synergies with the new deal they are closing now. The stock is significantly underpriced from where it belongs.

They acquired the world’s largest sports wagering company at an attractive price. Their biggest book runner just became their largest shareholder. He paid a 50% premium to where the share price is currently. It is a software company that is going to have remarkable margins. It is a lot of stock for the market to digest. It is a one year hold for him. You have to be patient.

There isn’t a multiyear on this one. Some of the peers are in trouble so he would avoid this one. It is guilt by association with AYA-X. We had an advance, but the volume has not increased, so it may be misleading.

3^rd largest manufacturer globally of software for online gaming companies. Could be a double this year. Pre-released year-end financials and there is speculation as to why they did that. Reaffirmed that Q4 will be their 1^st EBITDA positive quarter, with a lot of running room to go. Organic growth rate was 30%-35%, which was incredible, but trading at a low multiple. CEO owns a lot of stock.

Gaming stocks had their run about a year ago, and since then they have all come off. He would not recommend this, strictly on a valuation basis. Price momentum is okay, but is volatile. Value is not there. A lot of these gaming companies don’t really have a lot of cash flow today. You are banking on cash flow materializing in the future, which makes it really hard.

(A Top Pick Feb 10/15. Down 40.22%.) This was a long position and had hedged this out against Amaya (AYA-T) which sold off pretty hard.

The chart shows a gently sloping downtrend since August, but with a base of around $2. Feels the chart is showing a consolidation since about August, and it needs a break out. In the meantime, it is just a short-term trading vehicle.

This was a spin out that came from Amaya (AYA-T). They build the games that a number of companies use. After the acquisitions, they have been in the process of getting it streamlined and ramping up the revenue so that they are cash flow positive. This will be the 1^st quarter where they are fully cash flow positive, and when the numbers come out he expects the stock will move a little bit higher than where it is now. Management owns a big position in the company. Probably a business that will grow over time. At this point he would be tempted to dip his toes in. Try to get it sub $2.25.

Supplies most of the games for a lot of the online gaming companies, so regardless of who wins, they are going to get the business. The sector was a super hot sector for a couple of years. It has come off over the last year or so. Really likes management. Fundamentals have been very strong, but have come down with the rest of the gaming names. Have a bit of a guarantee on revenue through Amaya (AYA-T) for the next year. Expects you will see some cash flow generation over the next few quarters.

Stock has fallen from $3 to $2 and rallied back to $2.50 on 2 concerns, which he feels there is absolutely no merit to. One of their customers is Amaya gaming (AYA-T) which put out a bad Q3 because of poor poker revenues, but NYX has zero exposure to that. What they do have exposure to is the online gaming part, which is a key growth aspect to Amaya, but a huge win for NYX. Cash balance was lower than people expected but management has said they are now cash flow positive, so the balance sheet is not a concern. Just penned a $10 million strategic alliance with a US casino magnet. Going from negative EBITDA this year to $30 million or higher in 2016, and 50 million are higher in 2017. Trading at 6X next year’s EBITDA and 4.3X 2017 EBITDA, and all its peers traded over 10. 30% plus organic growth.

Pretty cautious on the online gaming group. This is a kind of rollup of 2 companies out of Amaya (AYA-T), a software maker that drives casino games for Amaya and other companies. A very competitive space and they have disappointed on hitting their target. They have a revenue guarantee from Amaya that is backstopping it, which lasts about another 2 years. Once that guarantee comes off, he questions if there are other customers strong enough to hold up that end.