We believe Penn National Gaming (PENN), at $31, is dramatically undervalued relative to the upside potential from legalized sports gambling in the United States. Thanks to its recent acquisition of Barstool Sports, we believe PENN will be a dominant player in the online sports gambling and iCasino market. We are holders of the stock since $13 and have recently added to our position around $30. Over the course of the next 3 to 5 years, we believe PENN will generate significant positive EBITDA and the market will re-rate its stock dramatically higher.

Penn National Gaming is an omni-channel casino that owns, manages, and has ownership interests in 41 properties in 19 states in the USA. It owns the largest number of gambling licenses in the United States. Prior to COVID-19, the company was also developing two Category 4 satellite gaming casinos in Pennsylvania: Hollywood Casino York and Hollywood Casino Morgantown. Plans for development of those casinos have been put on hold for the time being.

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