Dodge & Cox doubles Entain stake to become second largest shareholder
The fund now owns the second largest stake in the Ladbrokes-owner after American financial services firm Capital Group, which holds a 14.8% share.
Other major shareholders include BlackRock, with a 5.5%, and Sands Capital Management, listed as owning a 5% total stake in the company.
Entain shakes up capital allocation strategy
In last week’s quarterly financial report, Entain announced a shake-up of its capital allocation strategy.
This involved the formation of a dedicated capital allocation committee on the board to scrutinise decisions related to capital.
Entain said the new plan would see the company focus more intently on investments with higher returns.
Chief executive Jette Nygaard-Andersen added that the business planned to reduce its pace of M&A going forward.
This followed investor criticism the company was hurting shareholders by funding bolt-on acquisitions with undervalued shareholder capital.
Bumpy roadThe news is the latest twist in a turbulent year for Entain’s share price.
In February, the operator saw its stock plummet 13% after its BetMGM joint venture partner MGM Resorts ruled out a second takeover bid.
Speaking on its FY2022 earnings call, MGM CEO Bill Hornbuckle said: “The simple answer on Entain is no, we’ve moved on.”
Entain had previously rejected a January 2021 takeover bid from the US gaming giant that valued the business at £8bn, suggesting the offer “significantly” undervalued the company.
The shares faced another battering in March after the company forecast lower margins for 2023 compared to the prior year.
While the stock recovered most its value by May, news that the group faced a significant HRMC penalty for historic misconduct contributed to another slump.
This was exacerbated a few weeks later when shareholder Eminence Capital criticised Entain’s acquisition of STS Holdings as an “empire building, shareholder value destroying strategy”.
In August, the business announced it had set aside £585m for HMRC probe, a higher-than-expected figure. The stock had slumped to £11.75 per share by the following week.
After warning of “softer than expected” online revenue in late September, Entain stock finally hit a three-year low at £9.18 per share.