Jackpot Joy PL

(A Top Pick Aug 19/16. Up 20.39%.) This was taken out of Canada and put into England which is one of the most important gambling areas in the world. The sector trades at 15% in the UK, and this trades at 5%-6% in Canada. This is social gaming rather than hard gambling.

(A Top Pick Aug 19/16. Up 11.11%.) (Formerly Intertain) This is probably going to be very, very successful in London, once it can get recognized.

(A Top Pick March 29/16. Up 3%.) Online bingo. He still likes the company and owns a small amount.

There is a lot of hype around these names and the financing deals they are doing. A very confusing story to get your head around. They have a lot of debt on their balance sheet. There are better investment opportunities, particularly in the market we are in right now.

A very unusual situation. It has gone through an interesting renovation with a new management, after the 1^st management created lots of acquisitions, boosted the sales line up to about $500 million. A very serious social gambling type company. The newcomers are 2 Brits who have come out from the very much bigger British sector. They are going to take it back to the UK where it should belong, where it will stand out as the great gaming company for the ladies mainly. (Bingo)

(A Top Pick May 15/15. Down 41.41%.) The stock has declined significantly, and they are trying to figure out what to do with the company. Trading at 5 X PE. He would give this a pass.

Thinks 80% of their revenues are coming from the UK, so clearly in Q2 they are going to have a foreign exchange impact. Have put themselves up for sale.

The CO and CFO resigned a number of months ago over some compensation issues. The board felt that the best way to deal with this would be to put the company into play to be acquired. Expects there will be an update on this in the next few days.

Really cheap 3 months ago and then news of the strategic review came out and there was a nice little pop on the shares. There is a lot of uncertainty going on right now. They pushed back their AGM because at the end of June they are going to come out with an announcement of whatever’s happening with their strategic review. But now with the BREXIT vote, his worry would be that whatever deal was in the works, it is either being put on hold or being quashed. Too much uncertainty for his taste.

Has been tainted with the Amaya (AYA-T) brush. Had a Short attack which drove the stock down to $8. Should they be successful in finding someone to take them out, a price range of $17-$20 is probably not a stretch. A moderate growth business, but the free cash flow they generate is massive and should be commanding a much larger premium than what it is getting. Expects there will be a full take out of the company.

The company is up for sale, but it has been a long time coming in terms of getting any news. Meanwhile they continue to deliver the goods in terms of earnings. Very, very cheap. The valuation is attractive. The stock is worth more than what it is trading at now on a takeover.

Has always been leery about this name, largely because of their former management. Paid themselves about a $16 million bonus last year, which didn’t impress him. That was one of the catalysts that helped to bring down all the online gaming stocks. Not interested in this as either a Short or a Long.

It is an area of frustration. The on-going soap opera that comes out of AYA-T taints the other two in this space. It is guilt by association. It is a good business. 5-6% weighting in his small cap fund.

This got caught up in the Amaya (AYA-T) selloff, although the insider trading situation has nothing to do with this company. They have effectively put all or part of the business up for sale, and when he does a “sum of the parts” analysis, he can’t get a scenario where it is going to be less than $16-$18.

The upside is huge based on their earnings forecast. They were damaged with what happed to AYA-T. These stocks are cheap. They are good value. There is regulatory uncertainty, particularly in the US. Those walls are coming down, however.

Stock was attacked by a Short group. The board finally refuted the allegations, saying the math was erroneous. A good outcome was that the CEO and CFO have stepped down. Trading at 4X earnings and a 23% free cash flow yield. There could be a corporate sale and you could see well over 50% upside.

Not a big fan of this, largely because he is not very comfortable with the management team.

Online bingo that has 40%+ margins, a huge retention rate of clients, so this is a very strong recurring revenue model. Trading at 5X next year’s earnings and 4X 2017 earnings. The stock fell from $12.50 to $6.75 on some bogus Short report. He is looking for 20% growth.

Got hit with a Short- Sellers report. Likes the online bingo market, and feels there were a lot of inaccuracies in that report, but this is going to overhang the stock for a while. (See Top Picks.)

Has always been a bit leery about this. Prefers NYX Gaming (NYX-X) as a more conservative way to play. Q3 numbers were good, but Q2 numbers weren’t. One of the things that really caught investors’ attention was a very generous payout package that was afforded to management.

(Top Pick Nov 19/14, Down 7.71%) He still really likes it. It was doing fairly well and then they had issues with compensation. They were dragged down by AYA-T earnings, which he thinks was unwarranted.

Chart shows a bottom in December-January, followed by a slightly higher bottom in August-September. This gives a slightly advanced growth channel and he expects it to go back up near its $17-$19 level.

A name that has been fairly volatile. A lot of online gambling stocks have been impacted by Amaya (AYA-T). Amaya got access to New Jersey, and it was thought the level of scrutiny they went through was extremely high, so any of the allegations still being investigated should have been cleared. As that becomes more and more disseminated you should get a lift in the online gambling space. There was also a question of a compensation plan which has now been cancelled. This is the world’s largest or 2^nd largest online Bingo. The stock is bloody cheap trading at around 6-ish times of forward consensus. On his radar screen and if it falls much further he will be adding it. (See Top Picks.)

There is kind of a nice aspect to this, in that it is into social gambling, as opposed to being in the Las Vegas type of gambling. The group seemed to be very competent in building in this area.

The CEO and CFO are being compensated based on the value of acquisitions they have made. This has been controversial. He thinks the management team will be quite reasonable going forward. There is a large seller in the market place due to the compensation structure, but he would be buying more. He thinks they will grow the business and would not be surprised at a stock buyback.

This is in regulated gaming Bingo in the UK and has done extremely well. The numbers have been coming through very strong. Just got added to the index, so you are going to see a lot of index managers buying the name. This is a good opportunity. Trading at about 12X this year’s earnings. He would buy it now, but wait for a bit of a pullback. He could see $26 within 12 months or so.

You don`t need to go down the market cap in this sector. It is not a small company any more. They have associated with AYA-T. They are the world leader. They bumped up their forecast and it is not based on acquisitions, even though they can make good ones. It is mispriced. It got associated with the insider trading scandal at AYA-T. The sector is growing fast enough that there is room for more players.

He likes uncrowded trades, and this is a very popular trade, so he would be cautious about this. Would prefer Great Canadian Gaming (GC-T) as a safer play. Has been thinking about a possible Short on this.

Internet gaming company. Earnings are expected to grow extremely significantly this year and 30% in 2016. Has a 9.5 PE multiple.

This and a couple of other gaming stocks did very well last year. Part of the reason was that people were looking for anything that was non-resource for a large cap investment. This had a nice growth profile in terms of its acquisitions. At this price, there are worse places you could put your money.