Key Takeaways
- Hedge fund HG Vora Capital Management is seeking board seats at Penn Entertainment Inc., according to a regulatory filing.
- HG Vora has an 18.5% interest in the casino group.
- The hedge fund expressed concerns about Penn Entertainment management’s capital allocation.
Penn Entertainment Inc. (PENN) shares rose as much as 7% on Thursday after it was disclosed that a major investor is pursuing seats on the casino operator’s board.
Hedge fund HG Vora Capital Management has an 18.5% stake in Penn Entertainment, including swaps, and is in talks with the firm over the potential board seats, according to a regulatory filing. It wasn’t clear how many seats the investment firm, run by former Goldman Sachs banker Parag Vora, was looking for.
The opportunity to nominate new board members ahead of Penn’s 2024 annual meeting runs from Jan. 8 through Feb. 7, 2024. The Wall Street Journal, citing sources close to the matter, reported that the hedge fund could resort to a proxy fight should its negotiations fail to secure board seats.
“Given the persistent underperformance of the Common Stock and the Issuer’s capital allocation track record, amongst other areas of concern, the Reporting Persons have requested that the Issuer afford them the right to designate highly qualified directors who would be committed to working with the Issuer’s management and fellow Board members to help the Issuer realize its full potential,” said HG Vora in its ’s 13D filing Thursday to the Securities and Exchange Commission (SEC) said.
Penn Entertainment was dropped from the S&P 500 in Sept. 2022, less than two years after being added. During its brief time in the index, Penn’s share price fell about 75% from $130 to just $31.
Despite Thursday’s gains, Penn Entertainment shares are down more than 10% year-to-date.