Entain Faces Investor Revolt as US Hedge Funds Join Criticism Against CEO

New York-based hedge funds, Dendur Capital and Sachem Head Capital Management, have discreetly acquired stakes in Entain, compounding the growing discontent among investors. This move follows Eminence Capital's criticism of the stagnant share price and the leadership of CEO Jette Nygaard-Andersen. Entain's shares have fallen by over a third this year, in sharp contrast to the 11% rise in Flutter's shares.

The activist investors point to a series of setbacks, including a regulatory crackdown on online betting in the UK and management missteps, as reasons for their apprehension. The equity raise this summer, funding the acquisition of Polish gaming company STS Holding, adversely affected Entain’s share price. Despite 23 consecutive quarters of double-digit growth in online revenues, Entain warned of a potential decline in pro forma online gaming revenues.

CEO Jette Nygaard-Andersen, with minimal gambling sector experience, is under scrutiny. Critics attribute the company’s troubles to what they describe as "self-inflicted wounds." In response to the criticism, Entain has pledged to appoint four new non-executive directors to its board.

Activists, led by Eminence’s founder Ricky Sandler, are pushing for inclusion on the board and involvement in filling other vacant positions. Entain, in response, outlined a strategic plan for expansion, improved margins, and gaining market share in the US betting market.

London-based hedge funds Perbak Capital Partners and Ilex Capital Partners have taken substantial short positions against Entain, intensifying scrutiny on its future prospects. Despite challenges, Entain’s joint venture with MGM—BetMGM—remains the third most popular betting app in the US online market. However, MGM's CEO, Bill Hornbuckle, downplayed the likelihood of a second approach in the near future.