Activist hedge fund HG Vora Capital Management recently bought a 5.1% stake in William Hill shares for $149 million. The fund is well known for its longstanding experience in gaming equities. The deal is fueling speculation that the British bookmaker is poised for a sale.

HG Vora adds a new share to its portfolio

HG Vora is based in New York and had $7.56 billion in assets under management of the first quarter of 2020. The firm was founded in 2009 by Parag Vora and describes itself as a fund focusing on “value and event-driven investments.”

William Hill has aggressively expanded its US business as sports betting is becoming legalized in a number of US states. Several analysts suggest that investors are not valuing the company’s US footprint adequately. It is the largest sportsbook operator in the country and must be considered as a high-growth stock.

Is William Hill eyeing a partnership with Caesars?

Wall Street has been abuzz with rumors that William Hill’s US business could be headed towards a 50/50 partnership with Caesars Entertainment. According to a proposed deal, the companies will retain 40% share each and spin the rest 20% of the sports betting and iGaming business to public investors. The partnership could be useful to William Hill as it would allow the company to run all of Caesar’s sportsbooks across the US. Caesars’ new owner, Eldorado Resorts, already owns a 20% stake in the domestic operations of William Hill. It also collects 40% of the firm’s profits via this arrangement.

HG Vora also has ties to Caesars. The hedge fund established a stake in Caesars in 2018 after which the firm, which was already on flimsy grounds, sold itself to Eldorado. The fund retained 1.5 million shares of Caesars as of June but has been reducing its stake since then. It isn’t clear if HG Vora is looking to make a sale to Caesars as of yet. It could also be looking for another buyer which could be partnering with the William Hill US business.

The hedge fund has been carefully selecting its deals on the gaming consolidation front. It is already holding some positions in Penn National Gaming and Pinnacle Entertainment. This happened sometime before the Penn National acquired Pinnacle Entertainment for $2.8 billion in 2018.