by Travis Johnson, Stock Gumshoe | April 24, 2020 4:16 pm
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Buying GMMNF—when it gets listed, perhaps one can buy it w/o paying a penalty? Schwab has a fee to purchase shares.
It will trade normally like any other Nasdaq stock once the listing goes through, in the next week or two — ticker will be GAN.
Always a great read with my Saturday and Sunday morning coffee. Thanks.
I know you have your sights set on a $100 Boeing buy but what are your thoughts on the wider airline industry and further drops that would make it appealing for you?
In general, it seems a good industry to avoid right now — we don’t really know whether the government “rescue” funds will get them through, or we’ll see another wave of airline bankruptcies, but at least a short-term slowdown in aircraft manufacturing seems definite for the next year with the customers in financial distress and canceling or delaying orders… and that will trickle down to everyone. Airlines, airports (many of which are owned by publicly traded funds or companies), aerospace suppliers, etc.
I keep an eye on Boeing because it’s such a critical “won’t be allowed to fail” company and has the large defense business to bolster the flagging airliner business, but haven’t dug deep to find other stocks that might be potential bargains in the supply chain or elsewhere in the sector if this washout continues. And I’m fine with not buying Boeing if it doesn’t fall to a ridiculous price, there’s no FOMO here on that one.
Hi Travis, I’m a new subscriber and I thoroughly enjoy your complete analysis and candid opinion. Discovering your site has been an absolute joy as I look forward to reading your thoughts on just about anything. It really helps to shape my own reviews….. I’d really appreciate your thoughts on “PROSY” and “MRVL” if you don’t mind…
Many Thanks
I’d be inclined to look at Prosus (the Naspers “venture” spinout listed in Europe) again now that the discount is opening up between their market cap and the value of their Tencent shares (their Tencent stake should be worth around $160 billion, last time I checked), though I haven’t looked at their other investments (they’ve put a lot into food delivery companies in Europe in the past few years, which might become interesting).
Haven’t looked at Marvell (MRVL) in a while — I thought it looked like a reasonable turnaround speculation around $25 when the Oxford Club folks were teasing it with that Bill O’Reilly’ ad last fall, but haven’t looked at the actual fundamentals or their updates since then. They bounced back strong after the March collapse, like a lot of chip stocks, and have gotten a lot of upgrades and positive analyst comments recently, so a lot will be riding on their earnings and what they say about the stability of their end markets (and their growth prospects in 5G and server chips) at the end of May. The earnings growth expectations are very high, analysts think they’ll triple earnings over three years (starting last year), so the valuation is very compelling if that growth materializes — right now they’re trading at about 30X current year earnings forecasts, and 20X next year’s estimated earnings.
Thanks Travis, you’re an absolute Gent!
Thank you Travis
FYI, Markel just announced that their quarterly conference call will be held on Wednesday morning (April 29). Annual meeting is planned for May 11 at 4:30pm, they haven’t yet announced whether it will include a real presentation or shareholder Q&A but I’d guess they’ll follow Berkshire’s lead and take questions.
Buffett and Munger are smart enough to know that we have moved out of regions where our previous mental models work to predict what will happen. To use NN Taleb’s word we are now in “Extremistan”. Oil in negative territory? Airlines with zero bookings? Government debt soaring by trillions? Knowing what the actual value of a business will be in a year or two is almost impossible at this point. I think they will not make any large purchases, even if offered fire sale prices, until they can see where we are headed. And that isn’t likely to happen until the election is over and the next virus wave has passed.
hi Travis; I realize that #GAN will be listed any day now but wouldn’t it be better to buy #GMMNF before the new listing hype. I checked the quote and there is no bid/ask price so it is probably too late for that move.
There’s probably some “hype” in there already, this has been anticipated for a few months, but what will happen when US trading commences is a guess. Probably depends more on sports gambling sentiment and that day’s news flow than anything else. GMMNF is very thinly traded, even in London, so there’s rarely a bid/ask posted for the OTC shares but the price tends to follow GAN.L pretty closely, so if you want to buy it you can sometimes get an order filled if you place an order before London trading closes and are willing to pay a slight premium to the current quote in London. Your odds probably improve if you order in 3,000 share lots, since that’s the base trading lot for the stock in London, but there are probably odd lot trades as well. After London has closed trading for the day (at 11:30am ET) it’s quite unlikely you’ll get a US GMMNF order filled.
thanks,Travis. The listing date for #GAN is Wednesday May 6th
Should be an interesting week. The announcement of the roadshow and schedule also included some basic numbers from their first quarter results (more resilient than expected, given the absence of sports in March) and some relatively optimistic commentary about prospects for the year. That’s on the London Stock Exchange site here if anyone is curious.
Looks like today’s the day 🙂 my GMMNF converted to a holding ticker in my Etrade account. GAN was on Fox Business as 3X on the NASDAQ listing. I see it at 12.85 now. Thanks for the tip on GMMNF and DraftKings merger!!!!
Yep, a day before I expected — they priced the offering at $8.50, I was a little disappointed they didn’t raise that but it’s not a huge deal. Certainly got a nice pop, it was trading at a split-adjusted $11.20 when London trading was halted and opened at $11.50 or so in NY, getting over $12 pretty quick.
Do note that four shares of GMMNF or GAN.L become one share of GAN on the NASDAQ, there was a share consolidation in addition to the offering and the new listing, so it hasn’t really gone from $1.80 to $12 over the past six weeks, more like $7 to $12.
Travis, if you were to establish a new position in this stock or other sports gambling, what entry price would you feel comfortable? Appreciate your input.
The valuations are pretty challenging for all the “new” players like DraftKings and GAN, but that doesn’t mean they’ll stop going up. GAN is the least expensive small player I’ve come across so I’m happy to hold even at these elevated prices, but it will probably be volatile and could easily lose 30% or more in a bad week. DraftKings is insanely valued but is largely getting all the “brand name” attention now, the “blue chip” in the sector is Flutter (PDYPY), which owns FanDuel and is merging with The Stars Group, that one is much larger and is profitable thanks to its legacy UK/Ireland businesses, but it’s also international and growing far less quickly.
The one I’m most comfortable nibbling on at current prices would still be GAN, but it’s going to be a wild ride — if sports don’t reopen, or at least get clarity about when the big leagues will restart in the next couple months these companies will all lose a lot of business — the current prices seem to me to price in some optimism about leagues being played more or less normally by the end of the summer, so if that hope is dashed there could be some hard selling.
Thanks Travis. I might put a limited buy order then.
I was considering MGM back in March. Similar thinking that it could go down more given Vegas was in the dark. Who knew MGM price climbed back up so fast.
Indeed. I’m really wary about this instant bounce-back for all of the travel and tourism names, including the physical casinos, but hopefully the optimistic investors will be right.
Join the discussion…Any thoughts on getting back into DraftKings? I know you got out Sub 30 and then it climbed up to 44 and now it’s back down to Sub 30.
Not yet, their financials are a lot less appealing than GAN and Kambi… there is strong growth and a strong brand, but not much of a business yet relative to their massive market cal.
As a FYI TD Ameritrade along with other brokerages often have a “restructuring fee” for when a stocks uplists. Its generally $35-40. I think TD’s is $35
i wish you would take a closer look, not just at Exxon Mobil, but also Shell and perhaps BP, where the yields are even higher. I and my wife are in our seventies, so do not have the longer outlook that you have, but are certainly more interested in a relatively soon (2-3 years) income stream to allow us to retire. Our pension funds have been hit quite badly and will hopefully recover but I feel we might need to give them (ourselves really) a little help.