ValueAct Invests $78 Million in Flutter Entertainment, Owner of FanDuel.
San Francisco-based investment firm ValueAct made its way into the sports betting space by acquiring shares in Flutter Entertainment, the parent company of FanDuel, during the first three months of this year. The hedge fund purchased 495,135 shares of the Dublin-based gaming giant, valued at roughly $78.18 million, as per a filing with the Securities and Exchange Commission (SEC).
This marks ValueAct's first investment in the sports wagering industry and accounts for a mere 1.72% of the total value of their portfolio. Flutter, together with 11 other equity positions, figures prominently in ValueAct's listing.
The hedge fund's investment could hold weight with Flutter's recent decision to list its shares on the New York Stock Exchange (NYSE). Although Flutter's $78.18 million stake accounts for a small fraction of the company's gigantic $37.33 billion market capitalization, it could serve as a rationale behind the sportsbook operator's move.
The NYSE listed Flutter on January 29, citing a desire to expand its pool of professional investors. The connection between the investment and the exchange listing becomes more evident as first-quarter filings show that more than 135 money managers now own shares in the gaming company. While a bulk of these assets might have existed before the listing on NYSE, it wouldn't be surprising if Flutter gained new institutional backers during the initial quarter.
The growing investor interest might have added to the company's unanimous shareholders' approval of plans to transfer its primary listing from London to the NYSE. Jefferies Equity Research analyst James Wheatcroft believes this transition could occur as early as May 31. He rates Flutter a "buy" and targets a $275 share price, calculating an approximate 35% upside from current levels. In a note to his clients, Wheatcroft highlights that Flutter is currently trading at 17 times its cash flow-a significant discount compared to DraftKings, its primary competitor in the US sports betting market, which trades at 39 times its cash flows.
As for ValueAct's intentions with Flutter, some perceive the fund as an activist investor due to its history of pushing for company-altering stances. Yet, there has been no official announcement on this front. Instead, ValueAct poses as a long-term investor who seeks improvement in the companies it backs and could hold its Flutter position for up to ten years or more.
"We strive to leave a company in a better position than we found it. We typically hold positions for 3-5 years, but may also hold them for much longer. In some cases, over 10 years," describes ValueAct's philosophy.
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Source: www.casino.org
