Mittleman Brothers Investment Management, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly portfolio net return of 3.9% was recorded by the fund for the fourth quarter of 2021. In contrast, its benchmark returned 6.0% for the same period. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Mittleman Global Value Equity Fund, in its Q4 2021 investor letter, mentioned International Game Technology PLC (NYSE: IGT) and discussed its stance on the firm. International Game Technology PLC is a London, United Kingdom-based multinational gambling company with a $6.2 billion market capitalization. IGT delivered a 5.22% return since the beginning of the year, while its 12-month returns are up by 76.14%. The stock closed at $30.42 per share on February 16, 2022.
Here is what Mittleman Global Value Equity Fund has to say about International Game Technology PLC in its Q4 2021 investor letter:
“For the third consecutive quarter, International Game Technology was among the top three contributors to portfolio results. The company reinstated a cash dividend and announced its first ever share buyback program in Q4. While both initiatives are modest in amount they are a good start given how cheap the shares remain at 7.7x EBITDA and 11x FCF. IGT’s lottery business proved its resilience through the pandemic and continues to see strong growth. The slot machine business has also stabilised and sports gambling provides a tailwind of a large secular growth story that is underappreciated with IGT. Their “PlaySports” technology is the backbone of 50 U.S. sports betting operations in 17 states, including the retail and mobile sportsbook for Resort World Las Vegas, and they are behind the scenes on many other high profile operators. MIM increased its estimate of IGT’s fair value to $39 during Q4 from $38 per share in Q3 (previously $29), which applies the same targeted EV/EBITDA multiple of 9x on estimate of 2022 EBITDA at $1.6B, and market cap. to FCF multiple of 14x estimated $550M in FCF for 2022, but with slightly lower net debt.
MIM believes its estimate is conservative as IGT’s closest peer, Scientific Games’ (SGMS) lottery business was recently sold to Brookfield Asset Management for 12x EBITDA ($6B / $500M EBITDA), and does not appear to be a better business than IGT’s lottery business (which is 80% of IGT’s overall EBITDA). https:// www.gamingintelligence.com/finance/manda/146780-scientificgames-to-sell-lottery-business-to-brookfield-business-partners/. Applying the same 12x multiple to IGT’s lottery EBITDA would boost the value of IGT’s stock to about $55 per share, well above MIM’s $39 target and the $29 year-end price.”
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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. IGT was in 36 hedge fund portfolios at the end of the third quarter of 2021, compared to 32 funds in the previous quarter. International Game Technology PLC (NYSE: IGT) delivered a 3.33% return in the past 3 months. 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.
