1. GAN Limited (NASDAQ:GAN)
Number of Hedge Fund Holders: 10
Decline in Share Price Over Past Six Months: 69.26%
GAN Limited (NASDAQ: GAN) provides internet gambling software. The earnings of the firm in the fourth quarter of 2021, released in mid-March, failed to impress investors. Dermot Smurfit, the CEO of the firm, acknowledged that the financial results of the fourth quarter were “adversely affected by the volatile sports margin in the B2C segment”. However, the CEO also noted that this was consistent with other international operators and some of the downside had been offset by gains in new customer growth.
On March 23, Northland analyst Greg Gibas downgraded GAN Limited (NASDAQ: GAN) stock to Market Perform from Outperform, highlighting that the B2B business of the firm was growing slower than expected and the fourth quarter results were disappointing.
At the end of the fourth quarter of 2021, 10 hedge funds in the database of Insider Monkey held stakes worth $44 million in GAN Limited (NASDAQ: GAN), compared to 16 the preceding quarter worth $55 million.
In its Q4 2020 investor letter, Symmetry Invest, an asset management firm, highlighted a few stocks and GAN Limited (NASDAQ:GAN) was one of them. Here is what the fund said:
“We have been following GAN Limited (NASDAQ: GAN) for a long time while it was a small AIM-listed stock. The company had gained a strong market position in New Jersey when the state opened up the market for online casinos in 2014, and also exhibited solid growth and a compelling market position in Italy. But at the same time, it was loss-making, had to constantly raise new capital and the growth was not “overwhelming”. We still spent time familiarizing ourselves with the company, as we could see that their market position in the US could become a strength in due time. The first crucial news came in mid-2018 when the PASPA rule was removed, and all states in the US were free to self-regulate sports betting and casino. This presented itself a clear opportunity for GAN Limited (NASDAQ: GAN), but as they still did not have a sports betting product, we bided our time. When Pennsylvania, in 2019, also allowed sports betting and casino, and we saw how Fanduel/Betfair started to gain a strong market position building on GAN’s platform, we initiated a purchase. At the time the stock was still only increasing slightly, and the financials were still not good (it takes time for leading KPIs to affect the numbers). We continued to buy in light of willingness from more states to open up, and GAN signing on more and more customers. In May 2020, GAN Limited (NASDAQ: GAN) chose to substitute the small AIM exchange for Nasdaq in the US. As reported revenue began to rise +100% YoY and margins followed, the stock reacted strongly. The stock thus ended up rising 1.000% from mid-2018 to mid-2020. Even during 2019, one could still buy the stock for 3-8 USD (the stock was listed in the UK and in pence at the time). Today it is traded for approximately 20 USD.
GAN is therefore a great example of how you can follow a company for a long time, do your analysis, and be ready to buy in when the business model is facing the crucial inflection point.”
You can also take a peek at 10 Stocks Reddit’s WallStreetBets is Buying in July 2021 and Top Robinhood Stocks Popular on Reddit.
