HG Vora Pressures Penn Over $11B Shareholder Value Loss

Activist hedge fund and major Penn Entertainment shareholder HG Vora is intensifying its campaign for change at the gaming company. 

“Genuine Change Is Needed at PENN” 

In a detailed presentation titled “Genuine Change Is Needed at PENN,” the fund accused the premier regional casino operator in the U.S of squandering over $11 billion in shareholder value since 2021 by doubling down on online sports betting while failing to capitalize on the more promising online casino space.

Interactive online gaming stood for roughly 15% of the revenue in 2024. HG Vora spoke about the lack of “meaningful expertise or demonstrated track record of performance” for it,  as well as the focus on “OSB, a ‘winner-take-most’ industry in which PENN is a market share laggard”, and the cumulative EBITDA loss of around $1 billion and write-downs of approximately $850 million.  

The presentation also raised the problem of product offerings “historically” lacking “important functionality”.

The hedge fund further pointed to a string of expensive and underperforming deals as key contributors to the company’s steep decline. 

These include Penn’s $500 million acquisition of Barstool Sports, its $2 billion stock-based purchase of theScore, and its costly ESPN partnership, which could total another $2 billion over 10 years. 

HG Vora argues that the combined cost of these transactions is more than twice Penn’s current market value.

“Shareholders have suffered greatly due to poor strategic decisions, failed transactions, and poor execution; absolute and relative total shareholder returns have been abysmal, and more than $11 billion of shareholder value has been destroyed since 2021,” the firm stated.

The same presentation encouraged shareholders to vote the GOLD proxy card and “send a clear message that the status quo is unacceptable and that genuine change is needed”.

“The Board’s actions illustrate its aversion to substantive change and reinforce why such change is urgently needed.”. HG Vora further added in its presentation.  

Criticism Aimed at Leadership and Exec Pay Structure 

Penn’s stock performance reflects this turmoil. After peaking at around $140 and joining the S&P 500 just over four years ago, the share price has cratered to $14.20. The company has since been dropped from both the S&P 500 and MidCap 400 indexes and now resides in the S&P SmallCap 600.

Last week, HG Vora founder Parag Vora sent a letter to fellow shareholders, blaming Penn’s leadership team for the company’s ongoing struggles. 

“PENN trades at a discount to its intrinsic value because its management team and Board of Directors have lost credibility and investors fear further value-destructive decisions,” he wrote.

The fund also criticized Penn’s executive pay structure. “Paid the CEO near the top of the Company’s peer group despite consistent total shareholder return underperformance during his tenure; earned Say-on-Pay votes that were among the worst in the S&P 600,” the presentation noted.

While Penn has touted progress in its digital operations, particularly through its Hollywood Casino iGaming brand, HG Vora remains skeptical. ESPN Bet’s market share is stuck around 2%, far from the company’s 10% target, and digital losses continue to mount.

HG Vora is pushing for a board refresh with three independent nominees, reforms to executive pay, and a clearer, more focused plan for Penn’s interactive business.