Palm Harbour Capital, an asset management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. During the fourth quarter, the fund gained 2.26% gross of fees. The fund ended the quarter with year-to-date performance of 36.5% (+37.65% on a NAV basis). Inception to quarter-end return was 39.3% or 12.9% compounded annual return. Similarly, the fund’s last reported NAV at quarter-end was 13.75 (30/12/2021 +2.23%% from the closest reported NAV at the third-quarter end of 13.45). Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Palm Harbour Capital, in its Q4 2021 investor letter, mentioned International Game Technology PLC (NYSE:IGT) and discussed its stance on the firm. Founded in 1990, International Game Technology PLC (NYSE:IGT) is a London, United Kingdom-based multinational gambling company with a $5.3 billion market capitalization, and is currently spearheaded by its CEO, Marco Sala. International Game Technology PLC (NYSE:IGT) delivered a -12.83% return since the beginning of the year, while its 12-month returns are up by 29.90%. The stock closed at $25.20 per share on March 16, 2022.
Here is what Palm Harbour Capital has to say about International Game Technology PLC (NYSE:IGT) in its Q4 2021 investor letter:
“The second largest contributor was International Game Technology, the ItalianAmerican lottery and slot machine company, which we introduced in our first quarter 2020 letter and which contributed 78 basis points to performance. Early in the quarter, IGT’s main competitor, the highly levered Scientific Games, entered into a definitive agreement to sell its lottery business to Brookfield Business Partners for total consideration of $6.1 billion in cash and contingent payout. At $471 million last twelve months EBITDA (admittedly COVID affected, excluding unallocated central costs), Scientific Games lottery business was sold at trailing 13.0x. Scientific Games exited lottery business to optimize the portfolio and aggressively de-lever its balance sheet. We believe IGT’s lottery business to be much higher quality and certainly larger. If we were to use a similar metric for IGT, including all corporate costs but excluding Gaming and Digital and Betting, we would have around 90% upside. We are willing to bet the Gaming and fast growing Digital and Betting segments are worth something as well. It seems the sell-side willfully ignores this transaction and sticks with their 7-8x EV/EBITDA valuation.
The company reported third quarter earnings with sales up by 21% year on year, EBIT up by 144% and leverage down to 3.8x from 6.4x at year-end 2020. Total Adjusted EBITDA improved by 42% with margin gaining 618 basis points. Following the recovery, management reinstated the dividend of $0.20 per share…” (Click here to see the full text)
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Our calculations show that International Game Technology PLC (NYSE:IGT) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. International Game Technology PLC (NYSE:IGT) was in 35 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 36 funds in the previous quarter. International Game Technology PLC (NYSE:IGT) delivered a 2.90% return in the past 3 months.
In February 2022, we also shared another hedge fund’s views on International Game Technology PLC (NYSE:IGT) in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.
Disclosure: None. This article is originally published at Insider Monkey.
