*Title should read "cant borrow"

Hey Guys,

A little help, Im trying to short AYA on the tsx, but both Schwab and Scott Trade said they can't borrow the stock. I know some brokers are better at locating stock than others, can you do me a favor and inquire with your firm , then I can open an account there. Thanks.

Are you asking because you think they grossly overvalue pokerstars?

Keloika,

Yeah definitely think they way overvalued stars (4.5x trailing 12 rev, 11x trailing earnings), but the reason I ask is sometimes firms can borrow the stock, and others can not. Hoping some of you guys can ask your brokerage if they can borrow, and I will just set up an account there.

Can mods only change thread titles in their assigned forum?

Yes, should be fixed now.

No borrow on IB or one other source I'd rather not mention. No SSF. I think it's unshortable.

Wait this is implying they make 40% net profit margin. That's absurd.

from memory i recall it being stated they did 1.1b top line and over 400m profit, so it's definitely in the ballpark. and yeah, it's pretty impressive if true.

https://ca.finance.yahoo.com/news/am...012400506.html

"In calendar years 2012 and 2013, Oldford Group recorded revenues of $976 million and $1.1 billion, respectively, and adjusted EBITDA of $342 million and $420 million, respectively. Its cash flow from operations in 2012 and 2013 was $267 million and $317 million, respectively. "

Can you elaborate on why you think it is overvalued? Amaya has market cap of 1.9B, acquires 420m in earnings for 4.9B. If yield for financing is below ~6.5% it creates additional cash flow. I am also somewhat bullish for further organic growth of the Pokerstars earnings.

What percentage of that would you say is from Canadian players?

To evaluate the purchase you'd need to discount that amount by the probability that they will be forced to pull out of Canadian market.

In addition if they are forced to pull out of the Canadian market what does that do for whoever is #2 in online poker these days? In an industry like this size of player base matters a lot so does displacing an entire country of players improve another site sufficiently to be able to then start attracting players beyond the forced displacement?

yeah, paying ~10-11x EBITDA for stars seems like a pretty nice purchase price, especially if they can subsequently enter the US.

Wait they own Pokerstars AND Full Tilt? Jeebus. That's basically the entire market right there.

Sure their bottom line number grew by 25%, but revenues were up only 10% year over year. This sucks for the dominant industry leader, and the business is only contracting. If Stars was somehow to keep their revenues and margins at this level, it would take way over 11 years for this deal to pay for itself when you factor in interest costs.

The value of Stars brand in the American market, if they can get approved tomorrow is insignificant. Stars is a such dominant leader in the unregulated online market, because they offer great customer service, and players feel as confident as possible with their money deposited with Stars. So now they will enter a market which is regulated and transparent. What Stars did in the past, safety of funds and customer service, is now industry standard, therefore I do not think everybody will flock to pokerstars in the US like they did in the past. There are other options for a safe, consumer friendly environment, also their future competitors have extremely deep pockets, so no advantage there either.

Not too mention the state of the American market will be slow gradual change, if ever. Nevada, and New Jersey are huge disappointments and even if there is federal approval within 10 years, who is to say there will be players interested?

So mostly for those reasons I AYA is nuts for paying 11x earnings for a stock in an industry with so much uncertainty. Not to mention, look at the run up on the stock for the last 2 months, it more than doubled in value. Buy on rumor sell on news. I feel pretty confident this stock will be single digits by summer's end.

I had to turn down a group lunch meeting with the ceo of amaya due to scheduling conflicts, but ill speak to the guys who were there to see what was said

Ahnuld,

What type of firm do you work for? Is amaya doing a road show, or this was set up because guys in your company contacted them?

they were doing marketing with canaccord (who was lead) post deal. im in montreal where amaya is based so they make the rounds once a quarter.

bigger part of strat. is actually going to be introducing and cross selling casino games on stars/tilt than a US push, but they will go for both.

So they were prob raking 6+ million a day pre BF? Wowzers

You can't short Canadian shares.

Why do you think it's a short? I've just bought some, seems like a no-brainier over the next year. Falling to single digits seems unlikely. Their convertible debt is priced at CAD $20 per share and a lot of big names were involved in that deal, unlikely they'd get that wrong. Quick comparison, party is trading at 21 x PE, 888 15 x PE. Reading between the lines that's around 10-11 x PE for amaya. Given the strength of being the dominant player in the market (61% market share in OP), the growing earnings, the opportunity to roll out online casino and sports betting across 100m+ accounts. Leaving US aside it's a buy all day for me, what's your opinions? I see it going to 80CAD in 12 months.

Interested to hear anyone else's two cents.