Insider Buying: The Chairman of PENN Entertainment Just Bought Stock

Top-level insiders such as CEOs and Chairmen tend to have a good understanding of their companies’ operating activities. If they’re buying company stock, it’s often a sign that the outlook for the business, and its share price, is attractive.

In this report, we are going to highlight a large stock purchase from a top-level insider at PENN Entertainment Inc (PENN:US). PENN Entertainment is an American gaming, betting, and entertainment company. Its brands include Hollywood Casino, L’Auberge, and theScore Bet Sportsbook and Casino. The company is listed on the Nasdaq and currently has a market cap of around $3.5 billion.

Large Chairman Purchase

2iQ data shows that between August 22 and August 23, PENN’s Chairman, David Handler, purchased 20,000 shares at an average price of $22.65 per share. This trading activity cost the insider around $450,000 and increased his holding to 207,072 shares.

Investment Background

This trading activity is notable for several reasons.

Firstly, Mr. Handler – who has been Chairman since June 2019 – has served as a director of the company since 1994. Therefore, he is likely to know the company very well.

Secondly, Mr. Handler has an investment background. Currently, he is a Partner at independent investment banking and advisory firm Centerview Partners. Previously, he served as Managing Director at UBS Investment Bank.

ESPN Deal

PENN recently posted Q2 earnings that were ahead of estimates thanks to strong demand for sports betting. 

While total group revenue was only up 3% to $1.67 billion, in line with analysts' average estimates, net profit came in at 48 cents per share compared with expectations of 42 cents per share.

On the same day, PENN told investors that it had partnered with ESPN to jointly launch a sports betting business. This deal will see PENN rebrand its sportsbook service and relaunch it as ESPN Bet across the 16 legalized betting states where it has licenses.

The company believes the deal will add between $500 million and $1.0 billion in long-term adjusted EBITDA to its Interactive segment.

In light of these developments, we see the insider buying here as bullish.