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Insider: A big gamble and buying Woodford's trust
By Lee Wild | Fri, 19th May 2017 - 09:30
Bingo! It's Jackpotjoy
Most people know Jackpotjoy (JPJ) for the TV ads featuring Carry On star Barbara Windsor. It's the largest online bingo-led operator in the world, and last September it announced it would soon list on London's main market.
It took a little longer, making its debut only at the end of January, valued at over £460 million. And despite some initial promise, the shares had lost almost a fifth of their value within two months.
But since hitting a low point in March at 528p, Jackpotjoy shares have rebounded by almost 14% to a three-month high at around 600p.
That's largely down to first-quarter results published this week. In the three months ended 31 March, finance costs caused a net loss of £15.3 million, but the company made an adjusted cash profit of £29.2 million on gaming revenue up 11% to £71.4 million, driven by the core Jackpotjoy brand.
"For 2017, management continues to expect revenue growth in line with market growth rates and Q2 has seen a strong start across the group," said the company.
"Although there will be an impact on margin from the introduction of the POC tax on bonuses in the UK, due to commence in August 2017, this may now be delayed given the forthcoming UK general election."
And chief executive Andrew McIver is so confident he's just bet £109,000 that Jackpotjoy shares will keep rising.
McIver, who spent a decade at Sportingbet (SBT), the final six years as CEO, paid just under 590p for 18,500 shares the same day he unveiled latest results.
At current prices, Jackpotjoy shares trade on 6.4 times forward earnings, dropping to 5.5 the year after.
"The market is pricing in a high degree of execution risk, with 2017 trading multiples of 6.9x EV/EBITDA and 6.1x PE," writes Edison, a research client of Jackpotjoy. "Despite regulatory headwinds, we forecast continued strong underlying growth and we would expect a re-rating as debt repayments begin to drive value to equity."
Woodford Patient Capital Trust
It's been a tricky few years for Neil Woodford's Patient Capital Trust (WPCT). After peaking at a premium of around 15% in August 2015, the shares currently trade at a discount of over 8%.
It's a problem recently discussed by Kyle Caldwell, my colleague at Interactive Investor's sister website Money Observer. He said:
Given that one of the rules of successful investing is to 'buy low' and 'sell high', investors will not only be buying the trust on the cheap (as the share price has fallen 10% since launch), but they will also be buying low in terms of performance: WPCT's net asset value (NAV) is flat since making its stockmarket debut.
In the event of performance picking up, investors who buy today will therefore, in theory, benefit twice: From an improved NAV and a narrowing of the discount.
Directors clearly share Kyle's view. We've just heard that directors Pamela Louise Makin and Susan Searle this week bought £25,000 of Woodford Patient Capital Trust shares between them at a tad over 92p.
More crucially, Alan Hodson dug deep to buy 100,000 at 92.8p.
If Woodford rediscovers his mojo, the trio will be richly rewarded.
This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.