1060 Capital Ups Sports Betting Equity Exposure, Including DraftKings, but Pares Churchill Downs, Penn National Positions
Posted on: February 18, 2020, 09:26h.
Last updated on: February 18, 2020, 10:15h.
1060 Capital Management, a hedge fund with a track record of investing in gaming stocks, initiated positions in some sports betting equities in the fourth quarter. At the same time, they were reducing exposure to a pair of companies with significant sports wagering footprints.
During the last three months of 2019, the Chicago-based investment manager added stakes in Diamond Eagle Acquisition Corp. (NASDAQ:DEAC), MGM Resorts International (NYSE:MGM), and The Stars Group (NASDAQ:TSG), according to a 13F filing with the Securities and Exchange Commission (SEC).
Institutional investment managers that use the United States mail (or other means or instrumentality of interstate commerce) in the course of their business and that exercise investment discretion over $100 million or more in Section 13(f) securities must file Form 13F,” according to the SEC.
Professional investors must file 13F with regulators within 45 days of the end of the prior quarter.
Prescient DraftKings Bet
1060 Capital’s aforementioned investment in Diamond Eagle Acquisition is a bet on DraftKings because the daily fantasy sports (DFS) and sportsbook operator is using that entity to execute a reverse merger, by which it will become a public company later this year. Data provider SBTech will also be acquired as part of that transaction.
The hedge fund owns 150,000 shares of Diamond Eagle – a special purpose acquisition company (SPAC) – that were purchased at prices ranging from $9.85 to $10.84. The stock resides at $16.84 at this writing. 1060’s Diamond Eagle position represents almost 4.60 percent of its total portfolio.
Adding to its sports betting exposure, the hedge fund bought nearly 105,000 TSG shares in the last three months of 2019, making that stock account for 7.82 percent of the firm’s equity roster. It’s estimated that the average price at which 1060 bought TSG shares was $22.56, below the $23.82 the shares trade at today.
UK-based Flutter Plc is in the process of acquiring TSG for $12.2 billion, a deal that will bring the FanDuel, Fox Bet, and other sports betting brands together under one roof.
MGM, another name with significant sports betting exposure, was another fourth-quarter addition by 1060 Capital, to the tune of 55,000 shares.
In the October through December period, 1060 boosted its position in Eldorado Resorts Inc. (NASDAQ:ERI), bringing its position in the regional gaming company to nearly 141,000 shares, or 24 percent of the firm’s portfolio. The stock has almost doubled off its September lows.
Founded in 2013 by Brian Gustavson and Andrew Haley, 1060 Capital did reduce exposure in some gaming stocks in the fourth quarter, including previous favorites Churchill Downs Inc. (NASDAQ:CHDN) and Penn National Gaming (NASDAQ:PENN).
1060 lowered its Churchill Downs position by 17.85 percent while trimming its Penn exposure by 28.51 percent.
The decision by 1060 to pare its Penn holdings was made before that company said it’s paying $163 million to acquire 36 percent of Barstool Sports, an announcement made last month and one that sent the regional operator’s shares soaring.