Palm Harbour Capital, an investment management firm, has released its first quarter investor letter. A copy of it can be downloaded here. The fund gained 4.6% in the first quarter, before fees. The market’s primary focus in the first quarter, as it has been in recent years, was interest rates and inflation. Stronger-than-expected economic data in the first quarter raised hopes of rate cuts, which further fueled the rally. To see the fund’s best picks for 2024, please see its top 5 holdings.
Palm Harbour Capital highlighted stocks like International Game Technology PLC (NYSE:IGT) in its Q1 2024 investor letter. International Game Technology PLC (NYSE:IGT) is an operator and provider of gaming technology products and services. International Game Technology PLC (NYSE:IGT)’s one-month return was 1.72%, and its shares lost 37.03% of their value over the past 52 weeks. On June 27, 2024, International Game Technology PLC (NYSE:IGT) stock closed at $20.08 per share with a market cap of $4.049 billion.
Palm Harbour Capital stated the following about International Game Technology PLC (NYSE:IGT) in its Q1 2024 investor letter:
“We are shareholders of International Gaming Technology PLC (NYSE:IGT) since December 2019, and we first wrote about it in our Q1 2020 letter, at the height of the COVID panic when we added to the position. We originally invested under the thesis that the lottery business was a high-quality, recession-resistant, recurring business and that the market was punishing the stock due to high debt. The debt was due to the previous merger of GTECH and IGT, as well as the nature of the business, which typically requires a large upfront fee and/or capital expenditure to secure a multi-year concession from a government. The company was paying too high a dividend to support the controlling family, and we thought they would eventually adjust it to pay off the debt and prepare for future tenders. Then COVID came along and showed how even the recession-resistant lottery business could be brought to its knees for a short time.
The company has wisely placed a focus on deleveraging. It cut its dividend, divested its Italian B2C business Lottomatica in December 2020 for €1.1 billion and its Italian business payments business in February 2022 for €700 million. Due to these transactions and significant free cash flow generation, the company fell from a high of 7.0x net debt/EBITDA at year-end 2020 to 2.9x at year-end 2023, the lowest in the company’s history. Despite this, shares have weakened and continue to trade at around 6x EV/EBITDA, roughly in line with 2019 levels, despite the massive change in leverage…” (Click here to read the full text)
A digital kiosk that shows the wide range of sports betting options.
International Game Technology PLC (NYSE:IGT) is not on our list of the 31 most popular stocks among hedge funds. According to our database, 28 hedge fund portfolios held International Game Technology PLC (NYSE:IGT) at the end of the first quarter, up from 33 in the previous quarter. International Game Technology PLC (NYSE:IGT)’s first-quarter revenue beat expectations, increasing by nearly $1.1 billion, largely due to the performance of Global Gaming and iGaming. While we recognize the potential of International Game Technology PLC (NYSE:IGT) as an investment, we believe AI stocks promise higher returns and do so in a shorter period of time. If you’re looking for an AI stock that’s as promising as NVIDIA but trades at less than 5x earnings, check out our report on the cheapest AI stock.
We have discussed International Game Technology PLC (NYSE:IGT) in another article and published the London 50 list. You can also find more investor letters from hedge funds and other leading investors on our Hedge Fund Q1 2024 Investor Letters page.
CONTINUE READING: Michael Burry is selling these shares And A new dawn is dawning for US stocks.
Disclosure: None. This article was originally published at Insider Monkey.
