Major Entain stakeholder to wind down

The London-listed gambling operator faces more pressure on its share price.

UK.- Entain’s London Stock Exchange woes have deepened on confirmation that one of its biggest investors is shutting operations after nearly three decades. New York-based Eminence Capital, which was founded by Ricky Sandler in the late 1990s, is the FTSE 100 gambling giant’s third-largest shareholder after Capital Group and Dodge & Cox.

The investor has 6.5 per cent of Entain stock. The fear for the gambling operator, whose brands include Ladbrokes and Coral, is that Eminence will have to unwind its position as it returns capital to investors. That could lead to prolonged selling pressure on Entain’s already challenged stock price.

Despite holding well-known names such as Amazon and Salesforce in its portfolio, Eminence has struggled for performance over a long period. In a letter to clients, Sandler ascribed the closure of the firm to “underperformance, rising costs and increasingly challenging market conditions.” Eminence manages around $6bn (£4.42bn) and is expected to return at least three-quarters of investor capital by mid-to-late June.

“Over the last few years, it has become increasingly difficult to apply our rigorous bottom-up investment process to rapidly shifting market conditions and an evolving market structure,” Sandler wrote in a letter reported by Bloomberg. He added: “We believe that in recent years we have fallen short of our very high standard and your expectations. I am tremendously proud of the Eminence team for the business and culture we built and the quality of our investor base. The firm has been far more than a professional endeavour to me. It has been a defining part of my life.”

It’s been a tough period for Entain’s stock price, exacerbated by the recent rise in Remote Gaming Duty Entain’s shares are now down by over 26 per cent in the year to date. Declining retail activity in Britain and Ireland has also hurt the business, prompting plans to close a third of Ladbrokes shops in Ireland.

Entain is not the only company exposed. Eminence also holds smaller stakes in Flutter Entertainment and DraftKings.