A busy day
Investors welcomed the significant upticks in the share price of Caesars Entertainment and Penn Entertainment on Friday. For Caesars, which saw a 15% rise in its price, it was the news that renowned investor Carl Icahn bought a stake in the company.
calling for management to sell the company
The reason for the jump in Penn’s share price was an activist investor calling for management to sell the company. The Donerail Group sent a letter to the board claiming that poor strategic decisions and inadequate capital allocation have led to shareholder value being significantly lower than the company’s intrinsic value.
Iconic figure
Bloomberg reported on Friday that Carl Icahn has built up a significant stake in Caesars, citing sources close to the matter. His motives and the exact size of the position are currently unclear.
Speaking to CNBC last month following the underwhelming first-quarter results announcement by the casino giant, the 88-year-old said “I like Caesars and I own some stock, I would never do activism in Caesars.”
Icahn has previously built a 9.78% stake in the company by February 2019 and called on Caesars management to sell. This led to Eldorado Resorts going ahead and purchasing its rival for approximately $8.5bn. The billionaire sold off his stake in the company in 2020.
Questioning Penn’s management
The Donerail Group didn’t pull any punches in its letter to Penn Entertainment’s board, singling out CEO Jay Snowden for taking almost $100m in compensation despite the significant underperformance of the company. Penn’s share price was down 34% on the year before the markets opened on Friday. It soared nearly 20% before the day’s close.
highlighted Penn’s history of bad deals
Donerail also highlighted Penn’s history of bad deals, including selling Barstool Sports back to Dave Portnoy for just $1 after spending $551m to acquire it.
The letter outlined the financial services firm’s belief that the assets alone are potentially worth double Penn’s current market capitalization. A sale of the company could generate “meaningful and certain” value for shareholders.