William Hill WMH

[rimmy2000]

thanks 

Try to keep it original

there were some large trades announced at close. too.

[phillo]

[rimmy2000]

11% gain today which was triggered around 3pm (when the US market opened)

The intraday price actually went a lot higher than the 11% close, as shown in the chart below, the price touched £3.25 but closed at £3.13

If we look back to our original investment case we had two main triggers for a re-rating in the price, and the third rationale was potential M&A activity. Concerning the two price triggers these were regarded as:

• UK government review of spend limits to betting terminals
• US decision on gambling laws

Today the second of those decisions came in. The US Superme Court has decided to overturn the ban on US sports betting – announced today, and this was positive to WMH who has a large sports betting book in Nevada presently, but the price has responded to reflect the opportunity this brings for increased US activity. This is particularly helpful to WMH as it has an established presence in prime locations and now we await the company to guide the market on this new chapter in the coming months.

Equally I understand we will, later this week, likelty get the other decision we are awaiting – the UK position on retail terminals. Recall that the price dropped quite significantly a week or so ago, which I documented above. And this seemingly priced in the ‘almost certain’ limit on these machines to the lowest value under consideration of £2 Therefore we have today a) reversed that decline in the price from the prior week but importantly, I would argue, we are now pricing in the worst case scenario for the UK market. EG any value above the £2 that is announced is going to result in upside, in my opinion.

So let’s see what happens. My posiiton is back to about 28% gain, which is a healthy gain to date. I have not sold. I think the UK decision could come in at a rate higher than £2 as the press reports are a bit spurious, and based on “an insider tells us” type story.

I also think the opportunity in the US, where WMH is an established and well regarded operator, far outweights the negatives attributable to the UK issue. The worst case will see WMH (and others) close off loss making shops, reduce their estates, offer more incentives for online gaming, and run a more ofused retail network than at present. I also think the probability of a takeover is more likely now the US has repealed its gambling decision.

So, in a word:

Downside= probably negligible or nil in short term,

Upside= surprise (eg not worst-case) decisino from UK, US expansion and more likely US takeover.

[Guest PandaFace]

Phenomenal insight as always. Will give a bigger reply tomorrow. Wanna get involved more in this convo.

[rimmy2000]

Hi  do feel free. I am happy for anyone to post contributory information. This can be anything you feel comfortable with both positive and negative information is welcomed to balance the investment case. Pick an area of focus (gaming market consolidation in USA for example..? I know nothing about it) do some digging and see what you can come up with. For example I just found this:

 

"Roger Devlin, chairman of William Hill, has warned that slashing maximum bets on fixed odds betting terminals will leave the company at risk of a takeover from overseas rivals."

 

We are already assuming we are to expect this to be slashed to a minimum (£2) so takeover looks to be the best of a worst-case scenario, which I find absurdly funny, given the previous T/O was around the £4 mark IIRC. 

.. bring on a takeover

 

 

[Guest PandaFace]

Just seen a ‘breaking news’ article on Sky Business saying that FOBT will be limited to £2 for a Max bet in the uk. More to follow but assume we’ll see some movement on the open.

[rimmy2000]

yes, initially price was pulled 8% down i think. But buys outweigh sells. see the areas i highlighted red (these obvs changing a lot since img taken) we did say the worst case looked baked-in.

From -8% open to flat (11am) my account has seen a lot of change this morning.

We did say the worst case looked priced-in, so an easy 8% could have been made on that initial open. I didn't change my position.

 

If someone wants to go through the RNS and pull out pertinent points then feel free. I am struggling to find the time. But I am not sure if there is guidance when these changes are to be enforced (anyone?) and then working out the imapct to bottom line. However the price movement today tells me the market is not overly concerned (as I am not, either)

 

I think it is good that the industry is guided to behaving in a responsible manner, as there is a moral stance to all this, people should not be allowed to gamble to the point where their jobs, homes and security is at risk. Moderation is the key to the future here, so I welcome these changes.

 

It would be easy to sell now for 28% gain (I believe the share is also trading ex div) so there is income to be received too in the meantime. And I do think the patient here will be rewarded with a payout in the form of the very least bid rumors and more likely an agreed deal before the year is over. As to me, I will likely wait it out unless an opportunity arises forcing me to free up cash. But I am in no hurry to sell. Today's RNS reinforced the dividend would continue to reflect a payout of half profits, and that should provide reliable income should the markets lurch down.

 

I doubt I'll comment much more here in the short term, unless I get time to go through the RNS (I am hoping someone else will do that.. , maybe..)

 

Off topic:

We still have TWTR going on here, as well as NXR and WGB. I am doing well on HUR (having been buying from 11p) and SPD seems to be creeping up day by day. Has anyone else noticed that.

ITV and BOO are also going well and I want to look at SDRY at some point. So much to do. 

 

 

 

[rimmy2000]

by time I posted we are now 2.8% up on yesterday. Funny times. Will be interesting to see how US market reacts.

 

All the best, everyone.

rimmy2000

[rimmy2000]

Some context reading. HL article UK bookmakers: hurdles and handicaps

[rimmy2000]

Has anyone watched tonights world cup on ITV? obviously sports betting is a big part of the peripheral world cup activity. I have seen ads by WMH, as well as others. This has potential to add a windfall to the next trading figures perhaps. (just thinking out loud here)

 

 

[JamesIG]

I also think that given it’s been so sunny in Europe these last few weeks (and likely to continue) that people are more likely to bet. 

My reasoning

• more people down the pub
• more social atmosphere
• drink more ... maybe? (worth looking at some brewery’s too as a trade idea in my opinion, and retail)
• more likely to bet. I know I’ve placed a bet on the back of friend chat and the buzz down the local.

*NB: this doesn't constitute confirmation or an opinion on the trade idea itself, or an opinion on stock direction or a buy/sell signal. 

[rimmy2000]

16 minutes ago, JamesIG said:

I also think that given it’s been so sunny in Europe these last few weeks (and likely to continue) that people are more likely to bet. 

My reasoning

• more people down the pub
• more social atmosphere
• drink more ... maybe? (worth looking at some brewery’s too as a trade idea in my opinion, and retail)
• more likely to bet. I know I’ve placed a bet on the back of friend chat and the buzz down the local.

I agree @JamesIG, there are good opportunities here for traders to get ahead of the curve. We have had exceptional weather, so looking into bars and casual eating destinations may prove to be wise. Bars showing the games also. Now veering off topic but I was looking at RBG yesterday and there were only a handful of trades but the price was being pulled up. A very thin market, but a potential example of a company that may come away with improved performance over this period.

I know that FUL have an update in a week or so, I think this could also surprise to the upside as they are cashing in on the games and weather by offering 4x pizza for £20 deal.

I hold shares in FUL, WMH, and RBG.

[rimmy2000]

from today's CityAM.

QED.

[Guest PandaFace]

Again just reading about the England knock out saving bookies a heap of cash... upwards of £100m because they’re not going to have to pay out on the big bets for England to bring it home. William Hill up a percent and a half and PP up a chunk too. 

Great results IMO. Article in city am about pubs doing well as well.

[rimmy2000]

Yes, I agree with that @PandaFace, there is a good chance the World Cup will bring a windfall, and possibly Wimbledon (with Federer and Serena getting knocked out perhaps?)

The big news here is how things start to unravel in the USA I think, as this and likely consolidation will generate the big moves, but I agree with your sentiments this will likely be positive for the next trading update - through loss avoidance!

 

 

 

[rimmy2000]

thought I would update here. Price has been quite volatile lately. We have Q2 results a week on Friday. This will include World Cup and Wimbledon of course.

Up 2% today.

[Guest PandaFace]

Looking forward to this. Don’t wanna get aheadbut think we could be seeing some good trades coming right...

[Caseynotes]

Betting terminals review hits profits;

https://www.ft.com/content/8401e72a-9660-11e8-b67b-b8205561c3fe

[Guest PandaFace]

Still blows my mind that people put £100 into those machines for a single bet... it’s pure gambling for the sake of gambling in its simplist form. Not like balckjack or whatever which at least has asocial interactiom aspect 

Edited August 3, 2018 by PandaFace

[rimmy2000]

Thanks for the posts guys. Yes, half year results out today >> https://www.investegate.co.uk/william-hill-plc--wmh-/rns/half-year-results/201808030700027073W/

Price is down about 7% as I speak, so not well digested by the market. For me this is simply a case of loking at the original rationale, to see what has changed. My reasons to buy were

a) reliable and steady dividend. this is still being paid : no inc or dec. but 4.26p for the HY.

b) likelihood of consolidation. I think this remains in tact, and even more so with the US opening up gambling laws.

So on the face of it, it can be seen a s a failure but I believe the two rationale will continue. Dividends will persist and we will eventually see a takeover.

£882m was written off as impairment against the Triennial review and impact on retail betting outlets, debt is low and the statements always focus on this, so the business is in reasonable shape. - this is the bit which the FT have jumped on as per @Caseynotes post above.

We expected a good result from the world cup and this is confirmed in the narrative:

"Group net revenue in H1 2018 was up 3% to £802.6m, including US expansion net revenue of £0.6m. Gross win from the World Cup was £11.0m in H1 and £32.8m for the tournament as a whole"

 

Obviously a more positive result would have been preferable but this is not a disaster, e continue to hold.

[rimmy2000]

More news today from WMH. https://www.investegate.co.uk/william-hill-plc--wmh-/rns/us-partnership-with-eldorado-resorts/201809050700137733Z/

'US partnership with Eldorado Resorts'

Extends William Hill US' leadership in sports betting through access to Eldorado's leading regional casino portfolio and customer base of 23 million people

William Hill becomes Eldorado's exclusive partner in provision of digital and land-based sports betting and online gaming

Let's look at some quick and dirty numbers:

WMH currently trades from 2 US sites revenue of 

£56.5m GBP (or 3% of annual turnover)

So we already know the US contributes from a very small base to WMH revenues. This means there is easy scope to grow.

The agreement opens up WMH for 11 further states using Eldorado partnership:

"extensive market access of Eldorado - a major casino group with 21 properties across 11 states and a customer base of 23 million people."

Assume the other sites achieve 70% of the revenue incurred at current sites, and the division of revenue currently is an even split (eg £56m/2)

Work out potential across 11 states. Add to existing.

Here is a table I knocked up quickly:

[rimmy2000]

For anyone who trades exclusively off a chart, seems to be in a channel and hit the bottom this week, which coincided with the 23.6% fib line and point of prior support.. back into 300p+ ?

Edited September 5, 2018 by rimmy2000
spelling

[Caseynotes]

Wow, looking at the daily there are so many big gaps and on any day of the week too so a big mover on any kind of news and got a shot in the arm today from the news mentioned in @rimmy2000's last post. As you say though, the pattern looks pretty clear but I would definitely be keeping an eye on the co diary.

[rimmy2000]

CFO buy £100k @£2.57p

https://uk.advfn.com/stock-market/london/william-hill-WMH/share-news/William-Hill-PLC-Director-PDMR-Shareholding/78197680

  Nature of the transaction        Purchase of shares by Director (inclusive 
                                        of aggregated purchases by connected 
                                        persons) 
     -------------------------------  ------------------------------------------------ 
 c)   Price(s) and volume(s) 
                                        --------------------  ---------------------- 
                                         Price(s)              Volume(s) 
                                        --------------------  ---------------------- 
                                         GBP2.5766 per         38,998 ordinary 
                                          share                 shares 

[247trader]

Saw that william hill are extending their roots with a tie up with International Game Technology to offer sports betting with lotteries. 

Aparrently 50% of US trade lotteries at least once a year so the market could be huge. 

Stock hardly up at all on the news but an interesting development. 

[rimmy2000]

It is quite tricky for me to write here in the interim. Obviously hindsight is a wonderful vantage, and looking back I could have sold, taken a chunky profit, then bought back in. But hey-ho, would not have known that at the time.

Additionally, this brings up an interesting point that was written about in a Jesse Livermore book I am slowly reading. And that being that we must, must, consider that one aspect of our trading, or one dimension of our trading (as JL calls it) is time.

Time is the dimension that allows us to consider Opportunity Cost: what am I foregoing by holding this position. I am holding out for the consolidation but this may take months or even years to realise. And in that time there are other shares ticking along that I cannot be invested in because of the holding here. This is an important lesson to bear in mind.

But we have had signs that industry consolidation is ongoing, (driven even more so by regulatory changes in the UK that will exacerbate this, imo) WMH bought a smaller european company called Mr Green* which it is using to broaden their reach further. So we know the industry is still fragmented and the economies are coming by buying up and achieving synergies through overhead reductions.

*never heard of them before!

Ladbrokes went through a similar 'pit of dispair' before it was bought by Coral, the price continued to slide until it got opportunistically cheap and was pounced on. I expect something like this will still be the end game for WMH - the CEO mentioned it himself(!)  although I expect given the changes in the US then the suitor may be from the US.

We have had a trading update today which I need to digest, and also today sees a Capital Markets day which will inform the city of its plans https://www.investegate.co.uk/william-hill-plc--wmh-/rns/capital-markets-day/201811060700134151G/ and its three priorities:

·      Driving digital growth in the UK and internationally;

·      Growing a business of scale in the US; and

·      Remodelling UK Retail.

We continue to wait, and in the meantime we receive dividends "As previously stated, the Group's dividend policy is to pay out c50% of underlying earnings and as communicated at the 2018 half-year results the Board is committed that, for 2018, this will be calculated excluding US Expansion."

 

[rimmy2000]

this is really relevant to me, see 15:20 min onwards

https://www.piworld.co.uk/2017/01/02/conkers-corner-edward-roskill-interview/ 

"trying to be really disciplined is very important"

"trying to be distinguish between fundamentals and the stock price which can be completely different"

18:00 "prices can behave peculiarly"

"price is an irrelevance"

https://www.cnbc.com/2019/03/18/eldorado-resorts-caesars-explore-merger-sources.html

 

we wait.

 

 

 

Edited March 18, 2019 by rimmy2000

[Caseynotes]

Good interview @rimmy2000, sound advice on investing in general, know thyself. Thanks for that.

[rimmy2000]

another US Casino opening a WMH sports book https://www.prnewswire.com/news-releases/affinity-gamings-lakeside-hotel--casino-announces-opening-of-william-hill-sports-book-300898748.html

Market announcement in interims for tomorrow.

https://www.investegate.co.uk/Index.aspx?searchtype=3&words=wmh

Anecdotal evidence says the group are now closing shops and tidying up the operation for a US suitor to swoop. Of course the depreciation of GBP will make this a more appealing prospect than before.

We wait.. 

Hope everyone is surviving the turmoil of late.

[rimmy2000]

Struggling to find time to compose posts right now, so anyone following this story consider this post as borrowed news from other sources. 
NEW CEO in post (with a background in digital at a gaming co) and was head of digital at WMH I believe. The Existing CEO (Bowcock) goes immediately, whihc is not surprising.

Summary here:

https://www.investorschronicle.co.uk/shares/2019/09/05/news-tips-william-hill-melrose-redrow-more/

 

"William Hill (WMH) announced that its chief executive Philip Bowcock will step down from the position and as a director of the company from 30 September.  Ulrik Bengtsson, previously William Hill's chief digital officer, has been appointed chief executive officer designate and a director of the company with immediate effect, and will assume full chief executive responsibilities once Mr Bowcock steps down. The company stated that this change is part of its succession planning and consistent with the group's strategy of becoming a digitally led and internationally diverse gambling company. Shares fell more than 1 per cent in early trading. Buy."

Note: IC also have this tipped as a buy.